Sunday, January 30, 2011

Rising Lumber Prices Interpretated As Bullish For Real Estate

While the rally from the lows has been impressive, it still does not suggest an inflection in the trend. The pattern of lower highs and lows remains undisturbed since 2006. Despite some bullish prediction for housing, intense outflows by connected money as the price surges warrant skepticism, if not caution, until the setup changes.

Lumber (CC) And Lumber Diffusion Index (DI):


Headline: Time for timber to shine?

Looking for a sector that could benefit from a potential rebound in the housing market south of the border?

Wood products may just fit that bill, and Desjardins Securities Inc. analyst Pierre Lacroix Thursday upgraded a handful of names to reflect his view that profitability will get better heading into 2012.

"We believe that the investment outlook for wood products over the next two to three years is very compelling," he wrote in a note.

A number of these stocks have already seen a strong run-up. But Mr. Lacroix believes that lumber prices may encounter some softness in the near term, creating a buying opportunity further down the road.

Source: theglobeandmail.com

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