D.R. Horton a Home for Bears
The homebuilders have been under assault by the bears for almost two years.
But it takes a lot of time to wring all the hope out of a multiyear bull market that has enjoyed such widespread participation.
After beginning their decline in mid-2005, many of the homebuilding stocks caught some buying interest last summer.
As I understood it, a lot of the value-driven money managers were seeing some compelling value in this sector, with many stocks trading at book value.The sector had been moving inversely to bond yields. As the yield on the 10-year note (TNX) rose, the homebuilders fell. But after peaking at around 5.25 last summer, the TNX fell lower and the homebuilders started rallying. This symmetry indicated that the market was seeing the homebuilders as an interest rate trade. That's the obvious dynamic -- rising rates make money more expensive. That makes real estate more difficult to finance (and to refinance). But it looks like the market is finally seeing that the problem in the homebuilding sector runs deeper than interest rates. You'd think that the recent peak in the 10-year would once again provide some relief for the homebuilders. But that's just not the case, as they continue to fall. One particularly onerous chart that's not too late to pounce on is D.R. Horton (DHI). Let's take a look at the monthly chart.
| D.R. Horton (DHI) -- Monthly
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV