US housing confirmed strong recovery

Many analysts watch the SPDR S&P Homebuilding ETF (XHB) as one way to monitor for any sign in the housing recovery in the US. However, that the XHB has a relatively heavy weighting in a lot of housing industry related stocks that are not homebuilders (like HomeDepot, Bed Bath & Beyond, Masco, etc.). A more reflective homebuilding play may be found in another ETF -- iShares Dow Jones U.S. Home Construction (ITB) which its top holdings are homebuilders like NVR, DR Horton, PHM, Toll Brothers, Lennar,and Centex.

From the chart, we can see it formed a double bottoms in last December and this March, while the RSI indicator has formed a bullish divergence which usually signal a major bull is on its way. As at now, the index has taken out its prior peak done in May.

I think the US housing industry is confirmed with a recovery and it will be a powerful one.