LEONARD LUMBER REPORT: Headwinds?? You would think so

Headwinds?? You would think so, but I came in last week with the same thought only to see a stronger trade. It is really difficult to gauge the effects in the short run of all this. We are not cattle or corn; we produce homes. The psychology of that buyer has been fragile to say the least. This won’t help in the short run. Longer run, it will probably par inventories in the field. The current circumstances does not change the industry’s outlook. It is still the same. Flat construction, less supply, and the rallies caused by low inventories. The market recently did seem to be closing in on that “next buy.” The geo-political events may have slowed that some.

We can’t ignore the makeup of the market. We saw a big jump in industry longs and fund shorts. The industry longs carried the largest portion of open interest last week, even greater than the funds. They added almost 300 cars in one week. The industry positioned it right last year on the big moves. Let’s see where this one ends up.

Technical:

May futures recovered well from the Monday/Tuesday shock last week. The chart shows a close over $600 will bring in buying momentum. That seems like miles away right now.