Even though the homebuilding stocks bounced on Wednesday, CNBC's Jim Cramer warned that the market has turned on the sector, and to him, that means more pain ahead.
"If you own a stock like Toll [Brothers] here, well, you're fighting the Wall Street playbook," the "Mad Money" host said. "That playbook says to sell the homebuilders when rates are rising, end of story."
Shares of Toll Brothers lost 9.5 percent of their value Tuesday after the company's second-quarter earnings report missed estimates. But even as Cramer said a booming economy could help the homebuilder's recover, he expected the market to assume otherwise.
"Most investors will just keep waiting for something bad to happen anyway," he said. "All I can say is you have to let Toll's stock come down before you can try to take a stand. What can change its direction? Three things: time, lumber and labor costs. You could get a reversal in lumber, labor's iffy, but when it comes to time, that means you have to wait until the next quarter."
"In short, as much as I like Toll Brothers, the bears clearly have the upper hand right here and it would be foolish to fight them tooth and nail," Cramer continued. "[That's] why we say wait for Toll's stock to come down to lower levels before pulling the trigger."