Wednesday, October 24, 2018

Formation of a Double Bottom often Foretells the Beginning of a Bullish Market Trend

(Click on the image to enlarge)
The Monthly Median Sale Price chart (top) shows a classic double bottom formation, with a bullish 'W.' The second drop (#13 - $213,216) remains in line with the first (#10 - $213,108), meeting the classic requirement that the second leg remaining at or above the first one. 

The trend becomes more bullish when the second reversal eclipses the first (#14 > #12). When this trend emerges, the traders (professional traders and flippers) tend to move in. Both trendlines are confirming the strong market fundamentals. 

The normalized Price per SF trend (bottom chart) is equally bullish as the reversal makes a higher high (#14 > #6), with an up-sloping sideways. 

More importantly, both trendlines are ignoring the Jan-18 (#13) drop as an aberration, endorsing the ongoing reversal.

The double bottom analysis with a 'W' formation is often used in the equity market as well. 

Note: This underlying data covers the City of Houston, not the entire Harris County. 

- Sid Som, MBA, MIM
President, Homequant, Inc.

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