It’s never advisable to short a sector making a straight up move in a bull market. So let’s just call this a heads-up on a sector where sometime soon heads are going to roll.
Housing stocks and housing prices have gone crazy again. Just like in…uh, 2007. History repeats here and I suppose there are those out there in major cities bidding up asking prices on the belief that it’s different this time and even if is isn’t ten years or so from now they will break even on the house they overpay for today.
But it must be noted Toll Brothers (TOL), always the leading stock in the sector, took 6.4% hit today on its earning miss and gave a blow to the rest of the sector at the same time (see the chart panel below). From a charting point of view, today left a lot of uncertainty, if not downright fright, in the sector as measured by all those bearish candle patterns in the stocks. HOV, at less than $3 a share, always get weakest fastest, but consider the doji in the sector ETF, XHB, and in the builder,DHI…
Now is this a just shot across the bow or a direct hit on the housing sector ship?
Either way, heads up! Especially investors.
And P.S. if this sector starts to sink, put a spyglass on the banks.