Jon Lewis

Housing Stocks Climbing 'Wall of Worry'

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It's the earnings pre-season, if you will, as 11 S&P companies report next week. The significant reports of next week cover a number of sectors including food (ConAgra, General Mills and McCormick), travel (Carnival), auto (AutoZone and CarMax), tech (Red Hat and Research In Motion) and retail (Bed Bath & Beyond and Rite-Aid).

But most eyes will likely focus on the housing sector, as two of its more prominent names -- Lennar (LEN) and KB Home (KBH) -- report earnings on Monday and Friday, respectively. In between, we'll see data on existing and new home sales.

The housing news party actually started Tuesday. The housing market index gained for the third straight month, thanks to strength in single-family purchases and traffic. And Thursday morning we'll see data on housing starts. [Editor's note: Housing starts for August rose 1.5% to 598,000 units -- the highest level in nine months -- just missing analysts' expectations of 600,000.]

That's a lot for the market to chew on, especially given how skeptics continue to be proven wrong by a stream of better-than-expected news from the home front.

The positive housing sentiment news caused the SPDR S&P Homebuilders (XHB) to pop more than 4% [on Wednesday] to clear several major hurdles. First, the shares overcame their late-August peak around the $16 level. Second, and perhaps more importantly, XHB is now sitting atop its 100-week and 20-month moving averages. In its brief three-and-a-half-year history, the ETF has never closed a week or month above these respective trendlines.