Builders Hit a Wall

Big battleground: homebuilders. The charts are saying that the group has peaked. Any read between the lines about the president's view on things -- succinctly put by Doug Kass -- means that they will not get that giant giveaway. (Of course, that's probably a provision that the administration doesn't mind; it's the one that helps individual homeowners that is objectionable to these people.)

However, it does raise the question about whether this group has at last hit a wall on a combination of no tax breaks; no turn in business; and the need, still, to cut the prices of homes to reduce inventory.

After this run, I expect a pullback, but not a severe one, because what's happening to every non-public homebuilder? They are all going belly-up.

So while it would be great to get the tax benefit if you are a shareholder of Lennar (LEN - commentary - Cramer's Take), it is just as good to have all of your competitors go under.

The group goes lower, the HGX goes lower first, and then goes higher later.

Random musings: How is it possible that Kerry Killinger gets to keep his job even though the dividend's been slashed, the losses are up, and the new investors are smart at Washington Mutual (WM - commentary - Cramer's Take)!

At the time of publication, Cramer had no positions in the stocks mentioned.

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