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Home builders created a bearish wedge in 2006, broke support, rallied to “kiss the underside” of resistance then proceed to fall over 80% in value and the broad market followed.

Over the past couple of years, Home builders formed a large bearish rising wedge, broke support, rallied to kiss the underside of resistance 90 days ago.  Since the “kiss” took place, the Home builders ETF (ITB) is down 20% in value and Real Estate ETF (IYR) is not far behind down 15%.

This key sector had a huge impact on the broad market in 2007/2008, will the price action result in a different outcome this time?