Just because home prices are skyrocketing doesn't mean real estate stocks are
Last month was a doozy for investors. We've discussed how investors can manage September seasonality ad nauseam, but what about the other side of the coin? What stocks out there could fall victim to the seasonal doldrums, or are staring up at daunting technical ceilings? The expert trading team at Schaeffer's Investment Research compiled an "8 Stocks to Sell Now" report to highlight eight such stocks, including two from the healthcare sector. Click here to view the entirety of the special report.
KB Home Sensitive to Macro Headwinds
KB Home (KBH) is looking less attractive as a prospect for options traders, as the housing market boom slows. Sales have slowed dramatically, and the equity’s shares echo this sentiment, now sporting a nearly 6% deficit for the month of September.
The housing sector is highly sensitive to interest rates and the Federal Reserve has signaled that it will raise rates earlier than expected, as it carries a heavy debt load. KB Home is also coming off a recent earnings miss, suggesting investor expectations may have gotten ahead of themselves during the stock’s late-July run higher.
Zillow Group Staring Up at Key Trendline
Real estate platform Zillow Group (Z) is down 34% year-to-date, vastly underperforming the broader market. The shares are slipping below the round-number $100 level, which happens to coincide with five times Z's initial public offering (IPO) price. Additional resistance seems to be forming at the stock's descending 40-day moving average.
Analysts are unfazed, with 11 of 18 in coverage maintaining "buy" or better ratings. There's similar sentiment in the options pits, where Z sports a 10-day call/put volume ratio of 1.73 at the ISE, CBOE, and PHLX. In other words, almost two calls have been purchased for every put over the past two weeks.
In case you missed it, Schaeffer's Investment Research dove into September seasonality on a can't-miss episode of our stock market podcast. September is an alliteration paradise; replete with September scaries, a September selloff, whatever you want to call it, the three major indexes all sport monthly losses of 1% already. Amid this September seasonality, Adam Warner stopped by the Schaeffer's Market Mashup podcast to unpack what it means for the Cboe Volatility Index (VIX), how options traders can play seasonal trends, and what volatility could look like heading into 2022.