Jon Fisher submits:October 1972 housing starts fell from 2485 to 904 by February 1975. August 1973 housing starts at 2051, off ~17%, preceded the Dow Jones fall from 846.68 on January 2, 1974 to 607.84 on July 1, 1974 that was a ~28% correction. January 2006 housing starts fell from 2265 to 1381 in July 2007 that was a ~39% correction before the Dow Jones blinked still trading at 13,895 on July 2, 2007.Betting with housing starts can be bigger than simply shorting the Dow Jones. There is an inverse correlation of unemployment and housing starts in times of severe recession. October 1972 housing starts fell from 2485, the beginning of the inverse correlation cycle, to 904 in February 1975, right before unemployment hit a high of 9% in May 1975, the middle of the cycle. We are in the middle of the cycle today with housing starts hitting a low in April, 2009 and unemployment peaking at 10.2%.Complete Story »
