XHB - Trend Madness

XHB, 5/10/2007

People do dumb things at the heights of trends, like issuing the homebuilders ETF XHB.

Shortly after its debut, XHB began to sell off as the negative sentiment snapped the RE buying trend. As I mentioned yesterday, sentiment and fundamentals affect trend and in turn the trend affects sentiment and fundamentals.

I believe the pain for XHB and real estate isn't over but I wouldn't be a buyer here. Some people with their limit orders at $29 might just get XHB at the price they want, if they wait a bit longer.

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