Time to get constructive on homebuilders: Trader

Homebuilding stocks have enjoyed a seriously bullish start to the week, as positive housing data released Monday and Tuesday have buoyed the group. And technical analyst Rich Ross of Evercore ISI says the homebuilders have much more room to run.

"I think you want to raise the roof here on housing, it's flat-out killing it," Ross said in a Tuesday "Trading Nation" segment. "Housing is just getting going."

Ross said homebuilding stocks, tracked by the iShares U.S. home construction ETF (ITB), have been in an uptrend all year, but have recently broken out from the tension of an ascending triangle formation, an indicator of further gains ahead.

Ross said ITB could break out to $33, driven higher by an increase in U.S. housing starts and outperforming stocks like Home Depot, which beat on sales on Tuesday.

The Commerce Department reported Tuesday morning that U.S. housing starts rose 0.2 percent in July, to the highest level since October 2007. Single-family starts drove the increase, with a rise of 12.8 percent. This follows news Monday that U.S. homebuilder sentiment climbed to the highest it's been in nearly a decade.

Read More Single-family houses fuel gains in US homebuilding in July

Similarly, the ITB ETF is trading at the highest level since mid-2007. Within that exchange-traded fund, the largest weightings belong to DR Horton and Lennar, each of which has seen shares surge about 25 percent this year.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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