Just over thirteen months ago, I wrote this post about the homebuilders. In it, I discussed just how significant the $14 level really was, as it served as the neckline of the major head and shoulders bottom formed during the late stages of the 2008/2009 bear market. As we bottomed out last summer from a 16% correction in early July of 2010, one of the key pieces of evidence in maintaing a constructive view on the market was seeing the homies hold this area.
Fast forward to today and, lo and behold, we are right back to this zone. While it is certainly demoralizing for housing bulls to see the homies go roundtrip again, the more important thing is that this area continues to hold. In my estimation, the broad market does not need a wildly bullish homebuilder chart in order to flourish–It simply needs them not to flirt with testing their 2009 lows. Also note the weekly hammer just printed in this key area, illustrating that the bulls are willing to, once again, fight hard to defend $14.