The biggest home builder

Look at the stock of Hovnanian (HOV), which is the nation's biggest home-builder. The stock might tell us something about the forthcoming housing picture.

After a massive correction of 65%, HOV hit bottom at a price of 25 -- and rallied. But note that the histograms already appear to be rolling over, and RSI has started to move lower. HOV is now above its 10-week moving average but below its 40-week MA. It looks as though they've peaked.

Of course, the big question now is whether HOV breaks to a new low -- or whether it holds in a trading range above its last low of 25. If the housing industry is fated to be a disaster, I would expect HOV to break to new lows. If HOV can hold above 25, I would take that as a plus for the home-building and housing industry.