Homebuilders Emerge From the Penalty Box (pfblogs.org)

Daniel Andres Jacome submits: Amid increasing cancellations, declining land balances, and shrinking cancellations, something funny is going on among the nation's homebuilders: their stocks are going up! We view these stocks as "canaries in the coal mine" and just as they first signaled how bad things were going to get last summer, they may be telegraphing an improvement in the broad market. Many homebuilders have "V bottomed" and unless it is a cosmetic relief rally induced by gleeful short covering, the recent sponsorship behind these stocks is impressive. Fist, a word on the major index: Although the Dow is still well under the 200 moving day average, the MACD reading shows the first climb above zero since right before the Dow topped north of 14,000 in the early Fall. We attribute the latest relief rally to the fact that people simply "feel better" about stocks right now and shorts are winding positions, even as headline after headline continues to evade negativity. A 5.1% unemployment rate, a legion of write offs among financials, and sordid home sale data is not enough to wreak havoc across the tape, apparently. Complete Story » ...