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Wednesday, August 27, 2008

Home Builder Short?

The Housing market has way too much inventory, and prices are dropping.
Home builders kept on doing their job....building houses.
They where beat down hard in stock price, but recently rebounded significantly.
I don't believe sky is the limit for them....yet. We need to eat away at the multi-year excess built up in houses and free up lending.

Toll brothers, Centex, KBHome and others have recently rallied. But I like Toll brothers as a short.
Toll is probably not going to zero, but I doubt their stock is poised for a rocket ride.
So a short at 25 buck, if/when we hit it, and a "cover" of 26-27, so 1-2 buck risk if wrong. Otherwise target cover at 15, 2 buck risk if wrong, 10 buck reward if right.

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