Timing the Housing Market: A Pre-Fed Cut Play on Home Depot

We're buying 50 shares of Home Depot at roughly $364.95, taking our total position to 100 shares and increasing our weighting in the portfolio to about 1.1%. The market is selling off after the latest inflation report, but we believe the Federal Reserve will cut interest rates soon, sparking a new housing turnover cycle. Mortgage rates are already at the top end of their range, and we expect them to come down. Some experts predict rates could drop to 5% or lower, making homeownership more affordable and boosting Home Depot's business.

Mortgage rates between 5% and 6.5% are historically the sweet spot for a new housing turnover cycle. And with rates still at the top end of the range, we believe activity will pick up after the Fed gets a few rate cuts under its belt. We're not just relying on assumptions, though. We're basing our trade on historical data. We've even raised cash in recent days, ahead of the September sell-off. We believe the market is about to turn, and we want to be building our position before that happens.

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