Brutal Decline in Homebuilding Stocks

Originally Published in Charting the Markets November 28, 2007 9:05 AM

Everyone has their favorite bankruptcy candidate in the homebuilders, and the (XHB) ETF that tracks the sector reflects the concerns. Last week’s implosion in the GSE’s were the latest calamity to hit housing proxies, and the Fed will deliver lower interest rates in an attempt to ease the pain. We are keeping our eye on the XHB, but cannot envision a long position until a technical bottom takes shape and housing inventories begin to tick down. You won’t have to pick the bottom to make money when the stocks finally come around; this is a situation in which we would rather buy them higher when the stocks have sniffed out a turn in fundamentals ahead.

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