You can trade the homebuilders via the SPDR S&P Homebuilders (XHB) ($28.70). XHB closed Thursday below its 50-day SMA at $29.01 on a negative daily chart. The weekly chart shifts to negative on a close today below the five-week MMA at $29.05. My quarterly and semiannual value levels are $26.83 and $25.41 with this week's pivot at $29.73.
Over the past three weeks I have been looking for stocks to top out.
Back on March 18, I warned that 12 Sell Downgrades Threaten Dow Transports. The very next day, the Dow Transportation Average set an all time intra-day high at 6291.65.
The transportation sector consists of 186 stocks and only three have buy ratings. The problem is that 95 stocks are rated sell and another 49 are rated strong sell. This was a strong signal that this leadership sector was vulnerable.On March 19, I warned that Sell Downgrades Weaken Homebuilder Foundations. HGX and XHB peaked the next day. The construction sector consists of 160 stocks with only one rated a buy. In this sector there are 59 sell rated stocks and another 37 strong sell rated stocks. On March 26, I wrote Allocate U.S. Holdings to 14 Top Dow Stocks, explaining that brand name stocks are the most prudent investments when reducing your allocation to stocks by at least 50%. Today, there are 17 buy-rated Dow stocks and 13 hold-rated stocks. After making this call Dow Industrials pushed to a new all time high at 14,684.49 on April 2. I continued my sector analysis on April 2 in Dow Utilities Outperform S&P 500 in First Quarter. The utilities sector consists of 215 stocks with boasts 59 strong buy rated stocks and another 135 buy rated stocks. Here's a table showing the ratings within each of the 16 sectors tracked by www.ValuEngine.com: When I see the next waves of buys and sells within these sectors I will feature my analysis for readers on www.TheStreet.com. Keep in mind that sell rated stocks should be considered a source of funds.
The author has no positions in the stocks mentioned today. Follow @suttmeier This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.