We've noted several times in the last few weeks the ongoing weakness in lumber prices
here,
here and
here. We watch lumber prices because lumber, being a largely domestically produced and consumed resource, can give a good early indication of changes in domestic economic activity. Lumber prices are also closely correlated to stock prices (the S&P 500 in this case) and so we like to see the two price series following each other.
We note this today because lumber is currently down 1.8% and is clearly breaking through the horizontal support line (1st chart below). There is also a a decently wide divergence opening up between the S&P 500 price and lumber prices that we presume needs to be corrected in one way or another eventually (2nd chart below).
