The S&P 500 just printed new highs on an Iran ceasefire headline. Blake Young is not buying it.
He sees home builders set up to fall 15%. One stock already shows the damage.
The Rate Trap Tightening On Housing
Blake started with the bond market. Prices gapped down, tested the lows, then failed to hold a new high.
That failure points the 10 year Treasury yield back toward its annual highs. Higher rates land hardest on one group.
Home builders live on borrowing. Every buyer trying to finance a house feels it too.
Blake flagged a number most traders are ignoring. Consumers are defaulting on credit cards and unsecured loans at a multi decade high.
Higher rates pile onto an already stretched consumer. That pressure flows straight into housing demand.
Toll Brothers (TOL) Is Showing The Damage
Blake went straight to Toll Brothers because the financials show the story clearly. The bearish signal already fired today.
In today’s session, Blake walked through the exact levels and fundamentals behind the case:
Toll Brothers net profit margin fell 15%, dropping from the 12% to 13% range down to 11%. That is the lowest level in four years and still declining.
Inventory turnover is one of the worst readings in five years. Toll Brothers now has to sell homes at a discount just to meet its bills and obligations.
ITB, the home builder ETF, opens a target toward 88 and possibly 80 on a close below 92.48. That is a decline of roughly 14% to 15%.
Toll Brothers already triggered the bearish signal. Blake wants ITB to confirm with a close below 92.48.
He expects lower highs and lower lows across the group. He sees another shot at fresh annual lows once the timing lines up.
Blake also shows where the stable money is rotating while housing weakens.
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