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Sell Downgrades Weaken Homebuilder Foundations

The HMI peaked at 72 in June 2005, which is when I predicted a peak of the share prices for the homebuilders.

The index has been below 50 since May 2006, and home prices peaked in June/July of 2006. The low for the index was eight in January 2009.

My benchmark for the homebuilder industry is the PHLX Housing Sector Index (HGX) (191.18).

It has been moving sideways since Jan. 24 with highs between 192.39 and 194.06. HGX is up 11.6% year-to-date setting its 2013 high on Feb. 13.

My semiannual value level lags at 152.56 with a weekly pivot at 189.82 and monthly risky level at 194.28 lining up the Feb. 13 high.

Chart Courtesy of Thomson/Reuters

Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

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