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I picked a bad day to down thumb all the home builders!



March 17, 2009 – Comments (0)

 This morning I down thumbed all the home builders (before I read the morning news..).  Turns out to be a bad day for that, as there was a record rise in housing starts.  Which either indicates that things are getting better and home builders feel confident enough to start new projects due to cheap materials -or- that instead of taking a break from home building and letting inventories fall, the home builders are just taking advantage of cheap materials to build even more unnecessary homes.  If it is the latter, then the home builders will be shooting themselves in the foot.  There could also be the situation where some parts of the country will have too many houses and falling prices, but some parts of the country will have too few and need more builder activity. 

 I've been expecting a large rally in the S&P stocks to bring us back within the 800-870 range.  I had seen that this site is pretty overwhelmed with FEAR in the worst way.  I also watch GoodVibe's blog on occasion, though I claim to have little/no understanding of technical analysis and something of a distrust still. My fundamental belief is that there are some companies that are WAY oversold to the crazy bear fantasy land.  These prices must go up this year, therefore the market as a whole might be oversold.  So, two weeks ago I shorted all the ultrashorts.  I've decided to keep that shorting going until we get back to around 850 on the S&P (within the next two months, I think).  To hedge for if we fall, I picked the sector that I liked the least and was above 52 week lows - the home builders.  So I put shorts on all of those that I could today.

 So, anyways, if we crash, hopefully the home builder shorts will be a hedge - while if we do rise to 800-870 S&P, as I am betting, they will hopefully rise less than the market does.


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