There is no secret that the home-builder stocks have been one of the leading industry groups in 2012. Many of the leading home-builder stocks such as Toll Brothers Inc (NYSE:TOL), Lennar Corp (NYSE:LEN), and D.R. Horton Inc (NYSE:DHI) have surged higher since the October 4, 2011 stock market pivot low. It is safe to say that this sector has been leading the markets higher. Many investors believe as long as the home-builder stocks continue to climb there can’t be anything bad happening in the over stock market indexes. On the flip side, if this important sector begins to rollover or move into a correction it will likely signal that some problems in the major stock indexes could be on the horizon.
Today, most of the leading home-builder stocks are declining slightly lower on the trading session. The SPDR S&P Homebuilders ETF (NYSEARCA:XHB), and the iShares Dow Jones U.S. Home Construction ETF (NYSEARCA:ITB) are also declining lower. If these two leading ETF’s continue to decline over the next few days it could signal a shift or reversal in the current trend for the home-builder sector. At this time, today’s decline does not seem to be anything more than a slight pullback. In any case, this sector must be followed closely over the next couple of weeks as it will tell us a lot about the stock market.
