Kaminsky's Call: Eye on the Home Front

Don't be distracted by yesterday's 300-plus point rally. This is a market on edge, and there's a very simple reason why: home prices.

The so called "housing recovery" is a farce. It never really happened, and ultimately that will keep a lid on stock prices.

Today's "Call-to-Action" could not be more timely: Don't get swept up in short-term rallies. Keep an eye instead on the home front. That'll be the market's true tell.

As an optimist (and homeowner), I too would like to believe home prices have found a floor. But hope is not a reason to buy stocks, and unfortunately, as my friend and respected economist Barry Elias, pointed out to me, the housing market is in the throes of a massive deleveraging cycle.

In short, there are too many homes for sale, and until that inventory works itself off the market, the housing picture will remain bleak.

But that's just the start. There's something even more profound at work here than simple home prices.

As Elias pointed out to me, people forget just how important a role the housing market played in the overall economy. From people using their homes as ATMs, to the massive amount of jobs the housing industry generated over the past decade (brokers, construction workers, to say nothing of the massive profits it generated on Wall Street as bankers securitized and sold mortgages), the home front was the first and last word in wealth creation for the American investor.

Sadly, the only true remedy is time. Deleveraging takes a lot of time.

Yes, watch the rallies, but don't get too excited. It may not be until your home increases in value that stocks go anywhere, anytime soon.

So keep an eye on the home front and continue to pay attention to the bond marketfor an indication of where equity markets are truly headed.

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"The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

Gary Kaminsky does not hold any equity positions.

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