The media tried to put a bullish spin on the housing data this morning and justified today’s bullish move by saying the bottom is in and the data couldn’t possibly get any worse. When I look at the XHB I see a very bearish chart pattern and today’s 3% move did nothing to suggest otherwise. In fact, we’re seeing a rejection at it’s 200 day moving average + lower highs/lows + high volume sell off days. This is a recipe for lower prices if I’ve ever seen one and today’s move just worked off some of it’s oversold condition. I very much doubt this rally can continue much more without strength in this sector. Even the XLF is looking very weak when you look at it on a daily chart pattern.
I’m sure most got caught by today’s strength and I’m very thankful I sold off half of my contras at the open and the rest for breakeven or today would have been brutal for me.