When Will We See A Bottom In Homebuilders?

Homebuilders are down almost 70% from their highs. Time to buy, or would you be simply catching a falling knife?

Below is a chart of the Dow Jones Home Construction Index, currently the worst performing industry YTD at -50%. It is down roughly 67% from the high. If it continues along the lines of the NASAQ decline (roughly -78%), then the index could bottom around 240 from the current 370. That translates to approximately $14 for the ITB ETF that tracks the index (XHB is SPDR S&P Homebuilders version).

{Nod to Bespoke for the original post.) Chart of the Dow Jones Home Construction Index is below – from BigCharts.com.