I mentioned on July 30th that I'd begun watching the homebuilder ETF for a long term investment.  Since that time they've shed another 20%.  That's fine, I didn't think we were out of the woods, but there's been another encouraging sign that the downside may be becoming limited.  Yesterday the new home sales figure was pretty rotten.  Sales are down 21%, August's sales were weaker than expected and notably, the median sales price of a new home was down 7.5%!

So with all of abysmal news, what did the XHB do yesterday?  It was 1.46%.  I have found that when markets or sectors start responding opposite of what they "should", the trend may be reversing.  For example, during the 2000-2002 bear market, there was a lot of good news that came out about the economy and the market would take it negatively.  The inverse was true during the bull market in the late 90's.  There has even been a little of that recently.

I don't think this is a "back up the truck" type indicator, but it's a sign to me that the tougher times may be over for XHB.  That doesn't necessarily mean the hard times are over for home sales and home prices.