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Steve Cortes Isn’t Buying Into Housing Optimism

Wednesday, 15 Feb 2012 | 2:43 PM ET

Despite higher confidence among home builders in a report released Wednesday, contrarian trader Steve Cortes revealed how he was playing the space.

“I’ve watched these stocks in somewhat cynical amazement as they’ve rallied very hard,” Veracruz founder and author of “Against the Herd” said on “Fast Money.”

Time to Sell Home Builder Stocks?
Home building stocks are at 52 week highs. Has the sector hit bottom,and is it time to sell? Nishu Sood, Deutsche Bank analyst, provides perspective, with the Fast Money traders.

Cortes said he was shorting the XHB versus the S&P 500, adding, “So I’m going to bet on relative underperformance for a sector that’s done so well.”

The National Association of Home Builders reported bullish sentiment in its latest index.

But Cortes said there was not yet enough demand for home loans to support such optimism.

Deutsche Bank housing analyst Nishu Sood called the data point an anomaly.

“Demand is getting better,” he said. “Why hasn’t it shown up? That’s the outlier.”

Sood said there were three stocks he liked in specific categories:

D.R. Horton

Value play: MDC Holdings

Higher risk, higher reward: Pulte Group

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Trader disclosure: On Feb. 15, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Cortes is long Treasuries; Cortes is long SO; Cortes is long MO; Cortes is long DEO; Cortes is long RGR; Cortes is short EUR; Cortes is short CAD; Cortes is short Gold; Cortes is short Silver; Cortes is short XHB vs. S&P long; Cortes is short IYT vs. S&P long; Cortes is short BAC; Brown is long AAPL; Brown is long LULU; Najarian is long AAPL call spreads; Kilburg is long TLT

For Steve Grasso
Stuart Frankel & Co and it’s partners own CSCO

Stuart Frankel & Co and it’s partners own HPQ

Stuart Frankel & Co and it’s partners own MU

Stuart Frankel & Co and it’s partners own P

Stuart Frankel & Co and it’s partners own ZNGA

Grasso is long NUAN

Grasso is long S

Grasso is long XLU

For Abigail Doolittle
No disclosures

For Brian Stutland
AAPL bull option spread

BP long stock and short calls

DE long stock and short calls

EP short stock and short put and long calls as hedge

FXE long puts spread

GLD long call spread

INTC long stock and short calls

NAV long stock and short calls

SPY long put spreads

XLE long stock and short calls

MSFT long stock and short calls

MET long stock

Market maker holds hedged positions in VIX futures and options

For Scott Kesler
(SALESFORCE) I have no affiliation with any company I am speaking about in this interview.

I have no ownership interest in any company I am speaking about in this interview.

If S&P Capital IQ and/or one of its affiliates has performed services for and received compensation from the subject company during the past 12 months, then the equity analyst must disclose that fact for each subject company. The disclosure is on page 8 of the stock report above the "Disclaimers" section.

In addition to specific subject company disclosure, the following general disclosure should be made, "S&P Capital IQ and/or one of its affiliates may have performed services for and received compensation from the subject companies during the past 12 months."

For Ann Duignan
Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Deere & Co. within the past 12 months.

Director: A senior employee, executive officer or director of JPMorgan Chase & Co. and/or J.P. Morgan is a director and/or officer of Deere & Co..

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Deere & Co..

Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Deere & Co..

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Deere & Co..

Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Deere & Co..

Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation for investment banking Deere & Co..

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Deere & Co..

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Deere & Co..

For Nishu Sood
Deutsche Bank (and/or affiliates) owns 1% or more of any class of common equity securities of (DHI)

Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from (DHI)

Deutsche Bank (and/or affiliates) own 1% or more of any class of common equity securities of (MDC)

Deutsche Bank (and/or affiliates) own 1% or more of any class of common equity securities of (PHM)

Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from (PHM)

  Price   Change %Change
S&P 500
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DHI
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MDC
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PHM
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SPDR SP HB
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MDZ.A
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