“The implication here is that any kind of further advance in equities may NOT result in continued leadership by the industry even though QE3 directly targets it fundamentally,” he added.
Options traders are taking a cautious stance on homebuilder ETFs, pending home sales are down and the sector funds are facing key resistance levels that could derail the rally. [Builder ETFs Sliding]
“What it boils down to now is if the trend in homebuilders strength breaks from here, coinciding with continued strength in bonds, high dividend paying sectors, and a return of deflation fears,” Gayed writes. “Should the corrective hesitation turn to a full blown decline, do not be surprised to see homebuilders take it on the chin.”
iShares DJ U.S. Home Construction
