The home-builder sector has rallied recently from an oversold condition on August 24th, 2010. At that time the major market indexes were all trading sharply lower. Since that period the overall markets have rallied higher and the home-builder stocks have surged on that advance. Please understand that this is still one of the weakest sectors in the stock market. However, the home-builder stocks have provided some tremendous trading opportunities over the past couple of years despite their weakness.
Leading home-builder stocks such as Toll Brothers Inc (NYSE:TOL), Lennar Corp (NYSE:LEN), and D.R. Horton Inc (NYSE:DHI) have all sharply advanced higher over the past two weeks of trading. These stocks are now in the overbought area and look primed for short term profit taking. Therefore, these stocks could see pullbacks in the near term. It is important to understand that these stocks will often lead any declines in the major stock indexes.
Nicholas Santiago
Chief Market Strategist
www.IntheMoneyStocks
