U.S. Home Prices On The Rise To Open 2021
U.S. home prices are on the rise to open 2021. Earlier today, the S&P CoreLogic Case-Shiller Index (Jan.) reported an 11.2% yearly gain in prices. However, the uptick in U.S. real estate hasn’t translated into success on Wall Street. At the midway point of the trading day, the DJIA DOW (-140), S&P 500 SPX (-17), and NASDAQ (-39) are all in the red.
It’s no secret that American real estate is red-hot. A flood of Fed-supplied zero-interest capital has led to a receptive lending environment over the past 12 months. The result has been record-low mortgage rates and an aggressive lending atmosphere. Today’s home price figures certainly reflect this sentiment:
Event Actual Projected Previous
S&P/CS HPI Composite (MoM, Jan.) 1.2% 1.2% 1.3%
S&P/CS HPI Composite (YoY, Jan.) 11.1% 11.0% 10.2%
On a year-over-year basis, there’s no arguing with the strength of the American real estate sector. Nonetheless, there are signs that this trend may be set to slow down in 2021. First, the MBA 30-year mortgage rate has nearly returned to pre-COVID-19 levels. Second, the Fed’s policy of unlimited QE is expected to begin winding down toward the end of this year. Both of these items will impact borrows and lenders by tightening the availability of capital. While nothing is for certain, a tighter lending market typically leads to lower home prices as the pool of buyers shrinks significantly.
Home Prices Rise, GameStop Remains Active
Aside from rising U.S. home prices, GameStop (GME) has been a hot topic for Q1 2021. Share values of GME continue to hold in extremely bullish territory amid heavy participation.
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For this week, there is one level on my radar for GME:
- Support(1): Bollinger MP, $101.40
Bottom Line: At press time, shares of GME stock are trading in the neighborhood of $188.00 per share. If we see a big sell-off this week, I’ll be looking to buy in from just above the Bollinger MP ($101.40).
Until Friday’s closing bell, I’ll have buy orders for GME queued up from $105.75. With an initial stop loss at $88.75, this trade produces $17 per share on a 1:1 risk vs reward bounce from the $100.00 handle.
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