Pros Trade Homebuilders into Earnings

There’s still some time until the homebuilders release their earnings. What are the trades you should be making into the big reports?

In a live interview on Fast Money Stifel Nicolaus analyst Michael Widner made a few suggestions.
“For the long-term, a 3-year view, we like Pulte but in the short term we think its vulnerable," he says.

Widner's bearish outlook largely has to do with a widely followed metric that he expects will be weak. "We think they’re setting up for a disappointing orders comps and that’s something the Street watches closely,” says Widner.

By contrast Widner is constructive on MDC .

“This is a company with a strong balance sheet – more cash than debt – but the stock has languished (because) their management team has made questionable strategic decisions over the past few years. I think there are low expectations for this stock.”

Meanwhile Jon Najarian also has some thoughts on the homebuilders as well.

“I would shortLennar which has outperformed and pair it with a long position in DR Horton which has underperformed and play it for a reversion to the mean.”

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Trader disclosure: On Apr 13, 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 call spreads in INTC; Jon Najarian is long call spreads in IBM; Jon Najarian is long call spreads in HFC; Jon Najarian is long call spreads in MRO; Jon Najarian is long call spreads in SBUX; Jon Najarian is long call spreads in BRCM; Jon Najarian is long put spreads in GOOG; Jon Najarian is long CIGX; Jon Najarian is long CME; Jon Najarian is long CBOE; Pete Najarian is long AAPL; Pete Najarian is long AAPL CALLS; Pete Najarian is long C; Pete Najarian is long JPM CALLS; Pete Najarian is long MS; Pete Najarian is long INTC; Pete Najarian is long YHOO; Pete Najarian is long SBUX CALLS; Pete Najarian is long COP; Pete Najarian is long PEP; Steven Grasso is long ASTM; Steven Grasso is long AVAV; Steven Grasso is long BA; Steven Grasso is long D; Steven Grasso is long FRO; Steven Grasso is long MHY; Steven Grasso is long NUAN; Steven Grasso is long MO; Steven Grasso is long PFE; Steven Grasso is long PRST; Steven Grasso is long S; Steven Grasso is long XLU; Steven Grasso is long ZAZA

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