Whitney Tilson Explains Short Homebuilders Bet, $ITB Technical Update (Fast Money Video, 5/24/2010)

Part II of my first post on $ITB (DJ Home Construction Index ETF) with a link to Whitney Tilson's full housing report. Tilson of T2 Partners was on Fast Money last week explaining his "short" bet on the homebuilders or $ITB (ETF). Today $ITB pierced through the 200DMA but rallied back to close green at $13.79.  Watch the 200DMA, flash crash low and $12 support, which is also the 38.2% retracement level. If those levels get violated, I'm thinking $9-$10 is on the table (July, 2009 low and 61.8% retracement).

Watch out for a 50/200DMA golden cross to the downside which would confirm lower levels and fundamentally a double dip housing recession (imho); and keep an eye on interest rate black swans, you never know.

As previously noted here and here, John Paulson of hedge fund Paulson & Co., believes housing is in a V-shaped recovery and sees California home prices up 20% this year and 8-12% nationwide in 2011.  I'll look into some of Paulson's holdings next.

Source: CNBC

ITB (iShares Dow Jones US Home Construction Index ETF)