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Is The Housing Crisis Over?

A hedge fund manager argues in the WSJ that the housing market is bottoming. Is he right… or out of his mind?

On the opinion pages of The Wall Street Journal hedge fund manager Cyril Moulle-Berteaux writes that the housing crisis is essentially over. “How can this be?” he writes. “For starters a bottom does not mean that prices are about to return to the heady days of 2005. That probably won’t happen for another 15 years. It just means that the trend is no longer getting worse…”

He goes on to remind readers that the current housing crisis is nearly 3-years old, residential construction is close to its 15-year low, prices have fallen, and mortgage rates have come down.

Meanwhile, Fannie Mae's CEO Daniel Mudd said the housing market is now in "the belly" of one of the worst cycles since the Great Depression, also suggesting a bottom may be in sight. Fannie Mae, the largest U.S provider of home financing, posted a massive quarterly loss on Tuesday, its third straight. It also slashed its dividend and set plans to raise $6 billion of fresh funds.

Additionally, most analysts expect more bad news on housing, when the National Association of Realtors releases its index of pending sales for existing homes on Wednesday.

I think the market has priced in the housing crisis, says Karen Finerman. It's probably okay to dip your toe in the water. But if you want to play housing only look at companies with great balance sheets such as MDC Holdings and Centex and stay away from those that are highly leveraged such as Hovnanian, she counsels.

For the cleanest play, however, I like the SPDR S&P Homebuilders or you have another option; follow Warren Buffet into USG Corp. .

I think the best trade is Home Depot , adds Guy Adami.

Tomorrow's Trades #2

I can’t run away from these trades fast enough, counters Jeff Macke.

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Trader disclosure: On May 6, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (C), (GS), (INTC), (MSFT), (NUE), (BTU), (AGU); Najarian Owns (AAPL), (TSO), (XLF); Najarian Owns (BSC) Calls, (BUD) Calls, (CSCO) Calls, (EP) Calls, (MSFT) Calls, (YHOO) Calls, ( C) Calls; Macke Owns (DIS), (INTC), (MSFT); Finerman Owns (GS); Finerman's Firm And Finerman Own (HD), (KALU); Finerman's Firm Owns (MSFT), (NYX), (PLCE), (TSO), (VLO), (JCP), (AEO); Finerman's Firm Owns (YHOO) And (YHOO) Call Spreads; Finerman's Firm Owns SPX Index Puts; Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM); Finerman's Firm Is Short The British Pound; Charles Schwab Is A Sponsor Of "Fast Money"; WWE Programs Air On Networks Of NBC Universal, The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC