Toll Brothers' (TOL) quarter just didn't fit the thesis. Lower average home prices. Disappointing gross margins. An overall sense that maybe the euphoria in the group's been misplaced. I had a feeling this could happen and communicated it to Bruce Kamich, who did a jim-dandy job of showing, chartwise, why this group is really vulnerable. In case you don't know it, Kamich has been turning out some terrific stuff and he's become required reading in the quickest fashion I can ever recall at Real Money.
More important, this spike in rates is going to get people to think mortgage rates are going higher when home prices might not be, and that's going to be toxic to the best thesis out there. It doesn't help that the dollar's soaring against the euro, either.
Remember how much is riding on housing strength: It's THE domestic defense thesis -- no strong-dollar impact -- rivaled only by the auto-parts segment when it comes to bull markets. It was looking mighty strong after the Best Buy (BBY) blowout. Toll with its gigantic decline is wreaking havoc where the bulls can't have havoc.
For me, it's not enough to pull the plug on the group. That said, it is jarring, as Kamich predicted, and not what you want to see on a big rebound day.