Lumber Contract In I-Shaped Recovery, Up 91% On Year (Chart)

The Lumber contract is up 91% on the year, outperforming the S&P, Nasdaq and Gold. John Paulson said in a conference call today that housing prices could increase 8-10% in 2011.  Yale's Robert Shiller said there's a 50/50 chance of another housing downturn.  Who is bidding up lumber futures?

1-Year Lumber Continuous Contract (Courtesy of Stockcharts.com)

Lumber vs. SPY, GLD and QQQQ

Comments

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  2. Who's the bidder? I suspect homebuilders in anticipation of having several months worth of extra work. The tax credit expires in the next week and I think it's a rush to buy resources. In short, I think it's a "hope & pray" trade.

    Also, the timing of the credit expiration needs to be considered. It comes right at the start of peak homebuilding and home purchasing season. It's timed to give the maximum lift, hoping that people will *believe* housing is in fact, better.

    Let's just say I'm skeptical...

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  3. Interesting, thanks for your view. These homebuilding stocks are on fire, breaking out left and right. XHB is nearing resistance from 2008 (21-24) but you can see the major 5 year downtrend break from 2006. I'll post that chart up in a bit. I'll be watching for weakness.

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