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Burned by the Homebuilders ETF

A short position in the Homebuilders ETF looked like a hot trade but so far all it’s done is burn trader Steve Cortes.

Fast Money’s El Capitan made the ill-fated call on May 22nd. “I covered all of my shorts except for XHB,” he said at the time.

"I think material damage has been done by the price action. Also the big gap down in Lowe’s bodes poorly for the group overall.”

As it turned out, back on May 22nd Cortes should have covered his short in the XHB, too. Over the past 5 days shares have surged almost 6%.

Now what?

“I was wrong but I am still short,” says Cortes.

"I still think the breakdown in Lowes, and Home Depot as well as copper and other metals were all a sign of trouble. But if the XHB rallies more, I’m going to get out.”

* MOST POPULAR:"Marc Faber: 100% Chance of Global Recession"Our Marc Faber article was the most viewed Fast Money post during the entire month of May. You didn't miss it, did you?





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Trader disclosure: On May 29, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian is long AAPL CALL SPREADS; Jon Najarian is long BAC CALL SPREADS; Jon Najarian is long GS CALL SPREADS; Jon Najarian is long INTC CALL SPREADS; Jon Najarian is long IBM CALL SPREADS; Jon Najarian is long CIEN CALL SPREADS; Jon Najarian is long LM CALL SPREADS; Jon Najarian is long DDMG; Jon Najarian is long CIGX; Jon Najarian is long CBOE; Jon Najarian is long CME; Steve Grasso is long ASTM; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA; Steve Cortes is long XLE; Steve Cortes is long CLX; Steve Cortes is long AZP; Steve Cortes is short COH; Steve Cortes is short JWN; Steve Cortes is short XHB VS. S&P LONGS; Steve Cortes is short EUR CURRENCY

For Michael Binetti
UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of the following companies' common equity securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end): JCP
The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in NKE
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: KOH
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: RL
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.: KOH
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.: RL
Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: KOH
Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: RL

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