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Randoms: Homebuilders on the Radar

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The first to squirm might be the first to turn.

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Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also 2009: The Year of the "W" and What Does Chrysler Mean for the Market?


America's Worst Nightmare - 10:24 am

No, I'm not talking about O-Dog (although he's pretty scary), I'm talking about the housing crisis, which was the first domino to fall, eventually toppling the entire financial construct. Given that it was a leading indicator of the malaise, I've been keeping half an eye on the homebuilders for any signs of life.

Through that lens, I wanted to draw your attention to the chart of the homies (HGX), which are trying to trace out a "W" formation of a different breed (one entirely more bullish). Please note that this complex has mounted the 200-day moving average (92.60) and will face staunch resistance in and around the 100 level. Keep in on ye radar, Minyans, as we see both sides.


Click to enlarge


On a seperate note, I'll offer that I'm not thrilled with the early action in the financials (JPMorgan (JPM), Wells Fargo (WFC)) and, while I respect the potential for some pop (before the anticipated drop), I've nibbled on some FAZ and S&P puts for a pure trade with a tight leash.

My intention is to catch a quick fade and set a trailing stop at my entry levels. If we don't get that--and we might not, given the snazzy market breadth--I will be quick to cut my losses and let the market do what the market will do.

Discipline over conviction as we find our way.


Answers I Really Wanna Know... - 12:55 am

  • Given the global psychological fragility surrounding the swine virus, shouldn't our leaders choose their words extra carefully?

  • Y'all see Deutsche Bank (DB) and Goldman (GS) frippin' the downside switch?

  • As we spied the FAS gap fillage earlier, wouldn't "seeing both sides" dictate a mention of the upside gap in its evil twin sister (FAZ) between $14.50 and $17.50?

  • Hey, maybe I really do have a face for radio? (25th minute, for those who care.)

  • Does the S&P have to trade with a 9-handle to officially suck in the bad news bears?

  • It could be worse?

  • Have I mentioned how ridiculously awesome the Saturday Night Grateful Dead Garden Party was?

  • Are you allowing ample margin for error in your approach?

  • Given the pullback (from where I initiated my FAZ position (downside bank bet) and S&P puts), can I now slap some trailing stops at my entry levels and manage my risk reward through that lens? (Sure.)

  • Have you seen Hoofy and Boo's take on consumer confidence?

  • Has anyone ever seen me and a moth in a light bulb factory in the same room at the same time?

  • Who's got some snaps for the petrol?

  • Is it true, can it be, that there is a large contingency of folks out there who still want to be told what to do rather than understanding the "what, where, why, when and how" of doing it?

  • Can we say "remember to breathe" in good conscious given what's in the air?


R.P.



In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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Positions in FAZ, SPX

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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