TOL shows a consistent pattern of breaking out and then retreating temporarily to that break-out support. The most recent break-out was at the end of March (see charts 1 and 2). The zoom chart shows that TOL has declined 13% in 3 days and is right back to support from the March break out and the 2021 uptrend line.
![](https://static.wixstatic.com/media/eb4ead_07fc3c59c0814f3d8049c811c1eea89e~mv2.jpg/v1/fill/w_954,h_669,al_c,q_85,enc_auto/eb4ead_07fc3c59c0814f3d8049c811c1eea89e~mv2.jpg)
![](https://static.wixstatic.com/media/eb4ead_6d8c6802cee445c6855cf40235f6846f~mv2.jpg/v1/fill/w_973,h_582,al_c,q_85,enc_auto/eb4ead_6d8c6802cee445c6855cf40235f6846f~mv2.jpg)
TOL has always been a favorite of TPA, but chart 3 shows that it is at a critical inflection point versus ITB (the Homebuilder ETF). The ratio TOL/ITB is breaking out of a 12-year downtrend. Chart 4 zooms in on the recent move above the long-term downtrend. This a relative positive for TOL; indicating it will continue to outperform the group.
![](https://static.wixstatic.com/media/eb4ead_a9811971fb3840f99c8f9434117a6005~mv2.jpg/v1/fill/w_959,h_567,al_c,q_85,enc_auto/eb4ead_a9811971fb3840f99c8f9434117a6005~mv2.jpg)
![](https://static.wixstatic.com/media/eb4ead_1d1184b1d9ee4f34bfd13b55ecf7ec25~mv2.jpg/v1/fill/w_953,h_568,al_c,q_85,enc_auto/eb4ead_1d1184b1d9ee4f34bfd13b55ecf7ec25~mv2.jpg)
One fear for house buying and home builders is always an increase in rates. TPA has always argued that the level of rates has a long way to go before it dampens demand. Chart 5 shows that as rates have risen, so has TOL.
![](https://static.wixstatic.com/media/eb4ead_510045ce14894a7cb484b769e3fccb10~mv2.jpg/v1/fill/w_947,h_509,al_c,q_85,enc_auto/eb4ead_510045ce14894a7cb484b769e3fccb10~mv2.jpg)
TPA has been a consistent champion of home building, house prices, and the housing market, in general, since 2019 and remains bullish for the long term. As TPA has repeatedly explained, the supply-demand imbalance in the U.S. will take years and probably decades to resolve.
Below are World Snapshot reports 2019-2021:
- 10/21/19 The Homebuilder Rally Is Built For The Long Term
- 3/12/20 House Prices Should Remain Stable For The Long Term
- 2/23/21 Home Building Is Only At The Beginning Of A Long-Term Comeback
Comments