5 Sectors to Avoid in 2010

#2 The Homebuilders

Many analysts say housing has bottomed and are touting the homebuilders in 2010. However, roughly 50%-60% of demand for homes is gone, more than
800,000 foreclosed homes have yet to hit the market with another 1.4 million or more on the way, and no one can get a jumbo mortgage.

Here’s what I see happening: The homebuyer tax credit will be allowed to expire in April, there will be no more cash rebates to the homebuilders,
and unemployment will continue to stifle demand.

Trade: Buy puts on the SPDR S&P Homebuilders (XHB).

Shorting XHB is one of the Top 10 Trades
of 2010.

Next: The Financials