Last January, I wrote about how calls for a housing recovery this year were premature. As the following graphic illustrates, housing has resumed its downward spiral which is in early innings compared to the last bear market in housing.

My primary concern at the moment is that a huge number of mortgages are due to reset at a time when interest rates are rising.

Source: Lamont Trading Advisors, Inc.

And I don’t think we have heard the last about those troubled subprime mortgages. As a result, I am initiating a short position in Countrywide Financial (NYSE:CFC).