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Despite recent bullish sentiment on the housing sector, contrarian trader Steve Cortes isn’t buying it.
“I am short the homebuilders on spread versus the S&P,” Cortes said Thursday on “ Fast Money .”
Recently, such big names as Bill Ackman , Robert Shiller and Warren Buffett have sounded positive that the housing sector had nowhere to go but up. But Cortes pointed to predictions that housing wouldn’t experience a double-dip, which turned out to be wrong.
“Warren Buffett has been bullish wrongly on housing for two years,” he said, opting instead to bet that the homebuilders ETF, XHB, would underperform the broader market.
One key indicator for the bearish view, Cortes said, is the decline in lumber, copper and aluminum in recent months, as XHB rallied some 35 percent.
“When those key building materials are down, that tells me that the builders have had a bit on an excessive run to the upside. I think housing goes lower from here,” he said, admitting, “I liked this position much better on Tuesday than I do today.”
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