NEW YORK ( TheStreet) -- Homebuilders such as DR Horton ( DHI) , KB Home ( KBH) , Lennar ( LEN) , Pulte Group ( PHM) , Ryland Group ( RYL) and Toll Brothers ( TOL) haven't been "buy and hold" investments since the housing bubble began to deflate in 2005. So the way to make money in this sector is to trade the ranges following the release of housing market data and company earnings.
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Before looking at these stocks individually, let's look at the index that has these companies as components, the PHLX Housing Index, or HGX. There are 10 homebuilders in the index and nine companies that provide products and services in the housing industry.
Courtesy of MetaStock Xenith
The housing index became an inflating bubble in March 2003, peaking in July 2005 after a gain of 195%.
After the bubble popped, the index bottomed along with the market in March 2009. The decline was 82% versus a decline of 58% for the S&P 500 from its high set in October 2007.
Failing to hold the 200-week simple moving average (green line) in June 2007 accelerated the decline. The "breakout" above the 200-week simple moving average in January 2012 triggered strength to the top horizontal dashed line in May 2013, where this index stalled.