Housing Stocks Jump on Good News ... Every Time

Hilarious action? Every time we get a good housing number, the market immediately reaches for the same stocks: Masco (MAS - commentary - Trade Now), Black & Decker (BDK - commentary - Trade Now) and Whirlpool (WHR - commentary - Trade Now). It doesn't matter what the good number is -- pending, new home, existing homes ... simply doesn't matter.

This trade is a hallmark of this market. Do these deserve to go up each time we get good news on housing? Absolutely not. They discount the same form of news over and over again. It is as if someone thinks the numbers go up each time.

Now, they have fallen from such heights that you begin to think they have to retrace their whole moves, in part because they have gotten much leaner and meaner. But I think the actual sheer numbers of homes being bought is not all that helpful to these, and they need big spikes in new home permits and builds to really ramp like this. Seems almost silly, to me.

But it isn't the first time we have seen these coiled springs. Take a look at TRW Automotive (TRW - commentary - Trade Now) and Johnson Controls (JCI - commentary - Trade Now) and BorgWarner (BWA - commentary - Trade Now). No matter how many times we get a new good number from any auto company or we see decent monthly numbers, these stocks all just fly.

It is as if the discounting mechanism has simply stopped working and we have new price discovery every time on every piece of news.

It is so bullish as to be stunning to me. But you know what? This action is as bullish now as it was bearish last year.

Mirror image.

Random musings: Bert Dohmen is simply the best, and he's at it again with a must-read column on the possibility of a double dip.

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

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