by Tom McClellan
Financial Sense
Housing-related stocks are seeing an earlier than called for a push to a higher high. But if lumber prices are right, there are lots more gains to come.
By that, I am referring to the way that lumber prices tend to give a 1-year leading indication for the share prices of housing-related stocks, like those which make up the HGX Index. In the chart above, the plot of lumber prices is shifted forward by 1 year to reveal how the up and down movements seen in lumber futures prices tend to get echoed a year later in the housing sector stocks. It is not a perfect relationship; it is merely very good.