Housing...

Time to short more homebuilders, to maintain my exposure. Between ITB and CFC, I'm up about 25% on each, so I need to short more to maintain my exposure. I'm thinking of shorting more of the index.

Yahoo reported that:

"Housing is contracting at an accelerating pace, taking out with a vengeance the brief stabilization at the turn of the year," said Ian Shepherdson, chief economist at High Frequency Economics, a private forecasting firm.

This looks to me like a case of just shorting more all the way down. As was said in the UBS analyst report on homebuilders earlier this year, "book value doesn't mean anything." In the 1990 housing recession, homebuilders traded down to 30% of book. Beazer Homes might be approaching that, but it's hardly an average yet.
This quote from the same article shows the idiocy of reporters:

The supply of unsold homes did drop by 4.2 percent in June to 4.2 million, which analysts said was a hopeful sign that the price declines may soon come to an end.

I guess the drop in supply is better than a gain, but the supply versus sales increased to 8.8 months' worth. Ouch!

According to an article from the L.A. Times on Winterwatch, foreclosures are up 799% yoy for the second quarter of '07. The accompanying chart provides more information: during the last housing downturn, foreclosures didn't peak until the END of the housing recession. Bottom line, don't even start to look for a rebound until 2010.