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FDIC Quarterly Banking Profile Takes a Back Seat to Bernanke

Perhaps Rick Judson, the new NAHB chairman and homebuilder from Charlotte, N.C., read the FDIC Quarter Banking Profile and concluded that homebuilders cannot keep up with pent-up demand for new homes given the continued tight credit conditions for NAHB members.

According to Judson, builders are "expressing increasing frustration that they can't get access to construction loans to develop lots in markets where demand is on the upswing." This keeps construction workers sidelined and is frustrating potential home buyers and is slowing the housing recovery.

With the spring building season just around the corner, the NAHB is concerned that with inventories of new homes near record lows they will not be able to build in anticipation of demand because community banks are reluctant to lend.

Builders are also pointing out that creditworthy home buyers are having difficulty obtaining mortgages, which is resulting in cancelled home sales.

If you are bullish on the home builder stocks this press release is an important read.

The question of the day is how to trade this market given the cross-currents over the past several days? The daily chart of the S&P 500 is negative with the index between its 50-day simple moving average at 1478.09 and its 21-day SMA at 1510.06. The 200-day SMA lags at 1409.87. In my opinion the S&P 500 peaked at 1530.94 on Feb. 19, so my suggested strategy is to sell strength.

Chart Courtesy of Thomson/Reuters

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at RSuttmeier@Gmail.com.
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