The Federal Reserve Bank has announced that they are buying $45 billion worth of mortgage backed securities every month. This is also helping the housing market to inflate higher. Some leading housing stocks that have rallied due to all of the central bank efforts have been Lennar Corporation (NYSE:LEN), Toll Brothers Inc (NYSE:TOL), and The Ryland Group Inc (NYSE:RYL).
Should this industry group retreat or sell off it is a good sign that the major stock indexes could come under further pressure. When trading and investing, it is prudent to watch the leading industry groups. Thus far, this important sector has been holding up very well. However, in the near term this sector is very overbought and extended which would indicate selling action on the horizon. The home-builder stocks are one of the leading sectors at this time; keep a close eye on them as they will tell us a lot about this stock market over the next few months.