…56 other money-doublers we've had so far this year or the countless other double-digit gains we've banked.

You Can Go "Home" Again for Short-Side Profits

I've heard analysts and pundits proclaim the downturn in housing is over, and it will start recovering. Poppycock!

It's not over until the fat cats sing—that will be when Wall Street sentiment catches up with the fundamentals of the economy and market segments. That's nowhere near happening.

I'm absolutely convinced that there are more gains in store in the homebuilders. My faith lies in the facts:

Homebuilder sentiment hit new all-time lows from the confidence index that has been tracked since 1985. Median home prices are in danger of falling below $200,000 in the next quarter. Mortgage rates aren't coming down, and analysts forecast that Freddie Mac may cost the Treasury another $2 billions to $40 billion in the next 18-24 months, on top of all of the other bailouts.

In the meantime, the current bailout continues to morph, so let's review the latest terms.

Bailout? More Like Failout

The federal bailout program for home owners—which has changed so many times that I've almost lost count—comes from Freddie Mac and Fannie Mae. But it won't make a serious dent in future foreclosures.

The program is for mortgages owned by Fannie and Freddie, and that rules out subprime and most Alt-A mortgages because Freddie and Fannie don't own those. It also rules out any securitized mortgages, which are the majority of mortgages and are at the epicenter of the current housing depression.

The program also assumes people want to keep their homes, even if they are drowning in debt. However, most industry research had said the opposite is true and that most people underwater want to get out and move on. (See also: "How to Profit From Recesion Stocks.")

In addition, borrowers must be at least 90 days delinquent, and they must be able to pay up to 38% of their income. That sky-high number is well above most regional rental rates and above the generally accepted standard that housing costs should be no more than 30% of your income.

I'm not exaggerating the problems. Even the FDIC said the program "falls short of what is needed to achieve wide scale modifications of distressed mortgages."

So what's next for the homebuilders?