Based on what? Sure there's a little fear but it could (& is likely to) get much worse. Trying to pick a bottom when the charts all have red candles @ new lows w/ vol is a good way to get poor ... Rather than randomly trying to pick a bottom, take what they're giving you: - $HGX spent ~9 days failing to break thru the 25% retrace from 5/24 (& also creating a reverse hook test of daily T/L) - XHB failed @38.2% retrace (& 200D EMA) around 6/1 - RYL failed @ 200D SMA on 5/31 - LEN failed @ 200D SMA on 5/24 and has been in freefall mode since Rather than trying to guess when there's a bottom, you could have been following the signals and lining your account w/ $$$ from the short side... Enjoy your falling knife ... R
Homebuilders had a long secular boom. In most cases of a secular boom which then turns into a decline, the bottom is not in until you have at least a few major bankruptcies, until there is massive negative sentiment against the sector, until prices have declined very severely indeed. Although homebuilders have gone down quite a bit, and people are now negative on them, it doesn't feel like the true bearishness and disaster that I've experienced in other sectors and markets when they ultimately made their lows. So personally I will be waiting for things to be much worse than this before I consider covering exiting my puts and covering my shorts, let alone going long.
The bottom "may" be in? That is exactly what the housing shills have been saying for over a year now while the fundamentals continue to deteriorate. Good luck accumulating the homebuilders. You will regret it because they are going lower. By the way my largest position is short HOV (yes people are still short homebuilders despite what a poster in this thread said) and I expect the company to file for bankruptcy within two years. I don't know why anybody would want to buy a homebuilder now unless the idea of catching a falling knife is enticing. As bad as the New Home Sales report have been they would be much worse if cancellations and incentives were included. The grim reality is a bottom is nowhere in sight. The housing boom we experienced was unprecedented. People seem to overlook this and instead focus on how far the stocks have fallen from their highs. Look at where the stocks were trading at 5 years ago.
The chatter is really picking up in the media now. Blood on the streets. Ahh the fear! Music to my ears. Are you sure you still want to remain short?
This monthy chart of Lennar doesn't look good. There might be a short term bounce but the next couple of years might get ugly. [img=http://images3.pictiger.com/thumbs/ab/b0279fd495674674dee9f429ad24b7ab.th.png]
Buying homebuilders now is probably not a good idea when unemployment numbers have nowhere to go but up. Unless at or below 4.0% is possible for the next 15-30 years.
Even the oracle of Omaha knows how to spot a good deal. Ha, I beat him to it. "Warren Buffet is looking to take a stake in HOV spurred some buying in the beaten down group." http://www.elitetrader.com/vb/showthread.php?threadid=98924
Man I love the media. Smoke and mirrors my friends. Massive short covering about to occur in this group.