$LUMBER Daily Chart; -12% Collapse in Last 6 Days

Lumber is whacked lower from 590 to 520 a -12% drop in only 6 days. Ouchie. Ironically, lumber is taken to the shed out back, the one behind the garage, and beaten with a 2x4 (a stick of lumber). Lumber was flying high in 2021 up at 1600 to 2100 now stumbling along at 520. All of us Men Who Built America are old now. Sing it, Horslips.

The red lines show price making the matching or higher high and the indicators negatively diverging so it was time for a neggie d spankdown and voila, smack, down she goes. The RSI is flat for the lower low so price will likely bounce off the 200-day MA support at 519 for a day or so but then price should weaken again since the other indicators remain weak and bleak.

The cheerleaders for the housing market guaranteeing great times ahead tout the strength in lumber as proof of the blue skies and rainbows ahead for real estate. Whoopsies daisies. Maybe they will not tout lumber as much now. Lumber is beaten like a rented mule over the last couple years so a sideways stumble with a slight upward bias is likely the path ahead for the next couple years but that is nothing to write home about.

The US housing market recession is now in its 8th month and the situation continues to worsen so perhaps the drop in lumber will now start to confirm the negativity. 

The orange gap down below from May is big enough to drive a lumber truck through it so that will need filled at some point forward. Price has not yet touched the lower standard deviation band so that remains in play at 508 and dropping.

Keystone's 80/20 Rule says price seeks 2's if it achieves 8's on the way up and price seeks 8's if it drops below 2's on the way down. Huh? What's this guy talking about? If 520 is lost, it opens the door to 480 which is the blue line of support. 522 opens the door to 518. 512 would open the door to 508.

The Aroon produces a negative cross pointing to lower lumber prices ahead. The ADX was declaring the move higher in lumber as a strong trend, which had the housing market bulls joyously quivering and vibrating with excitement, but this trend petered out (pink box) and the trend higher in lumber in the daily time frame is now NOT a strong trend higher.

The lumber chart is interesting since it is one of the go-to key points that housing and real estate bulls point to as supporting the housing market going forward. No one has mentioned lumber over the last few days as price drops faster than a prom dress at midnight. California Girls. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 8/1/23: Lumber 505.

Note Added 8/3/23: Lumber 497.

Note Added 8/6/23: Lumber 495.