Why You Need To Follow This Sector

Many traders and investors will often follow the leading stock sectors for market guidance. For years, traders and investors would follow the transportation stocks as a sign of economic contraction and expansion. The financial stock sector is also another very important leading sector that traders follow, especially since the last crisis in the world was a banking and credit crisis. Now traders must follow the home-builder sector extremely close since this sector has been one of the strongest stock sectors throughout 2012 and arguably since October 2011.

The Federal Reserve is now buying $40 billion worth of mortgage backed securities a month and this is certainly telling us that they are desperately trying to inflate the mortgage and housing sectors. This same strategy was used by the central bank after the dot com bubble in 2000 by Alan Greenspan. This time around interest rates are at historically low rates in an effort to get borrowing costs lower. Many financial institutions have been buying single family homes anticipating a rebound in the housing sector. If the leading housing sector starts to decline sharply it could be signaling bigger problems for the economy.

Today, the home-builder stocks are declining lower, however, they are holding up better than the major stock indexes and many leading stocks. Toll Brothers Inc (TOL) is one of the most important home-builder stocks that anyone could follow. This stock is trading lower by 0.42 cents to $34.54 a share. The daily chart of TOL stock will have near term support around the $32.00 area. Short term intra-day traders can watch for support around the $34.00, and $33.60 levels. Some other leading home-builder stocks that traders and investors should follow closely include Lennar Corporation (LEN), Ryland Group Inc (RYL), KB Home (KBH), and D.R. Horton Inc (DHI).