Sweet, Sweet Rebound… Or is it

by The Investment U Research Team

After a brutal thrashing at the hands of the markets yesterday investors breathed a sign of relief as the indices rebounded slightly in morning trading.

It would appear that it was all just a bad dream and we can get back to the business of recovery. Or is it?

Like residents in front of hurricane Bill, investors are wondering what kind of damage they can expect from an extended pullback. And in another eerily similar parallel housing seems to be the root of our concerns.

Home Depot (NYSE: HD) beat estimates because of better housing market conditions in the northeast and California. But that also comes on news that housing starts were lower than expected.

We’ll see if today’s bounce back rally can undo the damage of yesterday’s 2% drop, and more importantly, we might get an indication of whether we’re going to keep on moving downward.

Symbols mentioned in this article: HD.

• As Housing Starts Fall… Lenders Putting “Final Screws” Into Homebuilders
• The Real Estate Market: Don’t Celebrate Housing’s Recent Uptick Yet
• Watch Out for Bank Stress Tests

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