I-Shaped Lumber Recovery Turns Into Upside Down V-Shaped Crash ($LUMBER, $ITB)

Lumber Contract
Remember lumber was going parabolic in late April? (link: Lumber Contract In I-Shaped Recovery, Up 91% On Year).  Housing stocks were breaking out left and right, riding that tax credit to the moon.  Here are housing posts on my blog from March to May 2010 sorted by date to see options activity and various predictions by Meredith Whitney, John Paulson (Paulson & Co.) and Whitney Tilson (T2 Partners).  If Paulson hasn't changed his view, he expects 8-10% housing price gains in 2011 and sees a V-shaped recovery.  Whitney Tilson went public with a research report on May 20 giving reasons to short $ITB (Dow Jones Construction Index).  ITB was at $13 at that time.  Guess where it's at today people, $12.  Tilson made you 7.7% in a month on the short side.  Back to lumber.  Lumber went parabolic and as you can see from the chart below, the I-shaped recovery turned into an upside down V-shaped crash.  It lost 42% from the April peak and wiped away all of 2010's gains.  I'll be watching for support, which looks like $170.

Lumber (Random Length) Continuous Contract (Courtesy of StockCharts.com)

ITB (iShares Dow Jones U.S Home Construction ETF)