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Steve Cortes Isn’t Buying Into Housing Optimism
15 Feb 2012 EST - CNBC.com
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Despite higher confidence among home builders in a report released Wednesday, contrarian trader Steve Cortes revealed how he was playing the space.

“I’ve watched these stocks in somewhat cynical amazement as they’ve rallied very hard,” Veracruz founder and author of “Against the Herd” said on “ Fast Money .”

Cortes said he was shorting the XHB versus the S&P 500, adding, “So I’m going to bet on relative underperformance for a sector that’s done so well.”

The National Association of Home Builders reported bullish sentiment in its latest index .

But Cortes said there was not yet enough demand for home loans to support such optimism.

Deutsche Bank housing analyst Nishu Sood called the data point an anomaly.

“Demand is getting better,” he said. “Why hasn’t it shown up? That’s the outlier.”

Sood said there were three stocks he liked in specific categories:

D.R. Horton

Value play: MDC Holdings

Higher risk, higher reward: Pulte Group

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