LEONARD LUMBER REPORT: NOW WHAT?

Now what? This industry has been in search of some positives for a while now. Just the fact that crude is up almost $5 tonight is enough to chase many fence sitters away. The middle east conflict will not be an ongoing factor, but for today we get another economic negative. We saw the industry getting longer and the funds getting shorter on the commitment of traders report. We don’t know why the funds are selling lumber futures, but if it a basket trade, they may be more aggressive tomorrow. That is the Monday morning report.

We are getting better economic reports. The 10-year broke and held a sub 4% on Friday. It is current lower. The PMI reports are healthy. This will temper any of the layoff fears we have recently seen. While they are better, it won’t change the 2026 plan of build less and hold less. The industry has had this” wait till there is no wood” mentality for 2 years now. I’m one of them. The difference then was we had higher rates and high inventories. Today, that is lessening.

We talked about creating anxiety. This market lacks the momentum today to create any. Our rallies will be need based and short-lived. Overall, this may be a do-nothing market, and that would be a worst-case scenario.

Technical:

The market should be looking for a bounce off the new low made last week. We are par at best and most likely a discount to cash. A corrective move measures to 596.45 May, the 38% retrace point. All this is predicated on our ability to tune out the rest of the world.

You have to wait and see if we are in a “flight to quality’ risk environment or not.