Watch This Seasonally Strong Sector

Focus: STOCKS

As the market digests its recent gains MoneyShow’s Tom Aspray is looking at stocks in the homebuilders sector, which is now in a seasonally strong period.

The stock market held up pretty well Monday as the S&P 500 is bumping into the 50% Fibonacci retracement resistance in the 1408 area. The McClellan oscillator, a short-term A/D indicator, has risen from a low of -285 on November 15 to a high last Friday at +140. It has now turned lower and a further pullback is likely.

A market correction over the next week or so is expected to be a buying opportunity and, of course, the challenge is to find the sectors and stocks that are likely to be leading the next market rally.

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The volume surge in the homebuilding stocks in October 2011 suggested a low could be forming and the fundamental data has been very positive for most of the year.