Home Construction Weak, Raises Potential Red Flag

The big-cap names surged early Monday and then started the slow grind down for the remainder of the day. The S&P 500 ($SPY) finished the day in the red, down by .41 percent. Tech ($XLK) and Materials ($XLB) finished in the green giving some pause to short-term negative nature of the big-cap S&P 500.

What did raise some red flags yesterday was the weakness in Home Construction ($ITB) -1.19 percent. Names like: $DHI -1.17 percent, $LEN -1.74 percent, and $PHM -1.24 percent, all contributing to these numbers.

This action could explain why small-caps ($IWM) were unable to surge to new highs with their large-cap brothers.

Healthcare ($RYH), which was the strongest and most powerful moving sector, took a big hit finishing down over 2 percent. This move is more of a warning shot over the bow, one that I am not going to ignore.

Have a good trading day!