The SPDR Select Homebuilders ETF (XHB) has gone "red" now after hitting a first-hour high at 13.50, which we noted on December 4 as our first target area, which happens to be 64% above the November 21 low at 8.21. The XHB represents the most beaten-down of market sectors (along with the financials), and led on the upside during the November-December upmove. So it's only reasonable to expect the homebuilders to be among the first of the sectors to peak and pullback. Corrective weakness in the XHB should press into the 12.25-11.80 support area, which should contain the selling pressure ahead of another loop to the upside that should propel the prices above 14.00.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.