Buy the Transaction, Not the House

If you missed it, I slipped a real gem into your email box on Wednesday morning when I shared my bullish view on Zillow (Z)

Since then, the stock gained 18%, as the crowd realized that 2024 has the potential of being a banner year for housing. 

But there’s a catch, and I want you to think about it before buying homebuilding stocks.

During my annual golf trip to Florida in November, I noticed what everyone knows… there’s a glut of inventory getting ready to come into the housing market. Think of it like holiday candy showing up to the store a week before the holiday. 

That “inventory” is going to get discounted soon and the homebuilders will pay.

Instead of the hombuilders, I want you to think about companies like Zillow and Redfin (RDFN).  These will be the beneficiaries of the “transactions” that lead to home ownership, which I’m quite bullish on in 2024.

Here’s what the chart says…

  • Zillow is likely to see a short-term consolidation.
  • Shares still haven’t taken their August highs.
  • The 50-day moving average just turned bullish (now rising).
  • Next long-term price target is $90.
  • Short-term support sits at $55.

Bottom Line: There’s still an opportunity to ride what may be one of the hottest stocks in housing in 2024 as shares are likely to hit $55 before their next launch higher.  

Sidenote, Zillow’s strongest seasonality occurs in January and February each year.

About the Author

Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.

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