Led by weak economic data and a number of disappointing earnings reports, stocks in the U.S. plunged on Thursday

The commerce department said that in December, sales of new homes dropped 14.7% to 331,000 -- the most since 1994 -- versus expectations of 400,000. On top of that, was news from the labor department that said weekly initial jobless claims jumped by 3,000 to 588,000 versus estimates of 575,000. If those figures weren’t bad enough, the worst was the number of Americans who are currently claiming unemployment insurance, which came in at a seasonally adjusted 4.78 million, marking the highest total since 1967.

The Dow Jones Industrial Average lost 227.15 points, or 2.7%, to 8,148.29 and the S&P 500 dropped 29.04 points, or 3.3%, to 845.04. The Nasdaq gave up 50.5 points, or 3.2%, to 1507.84.

The weak economic data reported on Thursday could be a signal that a bottom in the housing market is nowhere in sight. Combine that with weak earnings reports from the likes of Sony (SNE), 3M (MMM), Qualcomm (QCOM), Kodak (EK) and Starbucks (SBUX), and the U.S. economy is showing no signs of a real recovery.

If the fundamental news is sending a strong message that the housing market is still in dire straits, then what are the charts of some of the leading stocks in the housing market forecasting?

Let’s take a look and see if the charts are following the negative trend shown in the economic data.

Below are four compelling housing-related charts that could be setting up to make a significant move.

1. Black & Decker

First up is the Black & Decker (BDK). This company is a global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems. On Thursday, the company reported that fourth-quarter net income dropped a whopping 77% as sales continued to drop off as the economic slowdown deepened. But the fundamentals aren’t the only problem with Black & Decker.

Shares of BDK have hit resistance at around $47 to $46 a share three times and have now failed that level and fallen below both the 50-day and 200-day moving averages. On Thursday, volume exploded to over 7,900,000 shares marking one of the highest volume days since 2007. If shares of BDK break below $32 a share it could be heading significantly lower.

2. KB Home

Another negative looking chart in the housing sector is KB Home (KBH). KB Home is a builder of single-family homes, townhomes and condominiums. The company operates in Arizona, California, Colorado, Florida, Georgia, Illinois, Maryland, Nevada, New Mexico, North Carolina, South Carolina, Texas and Virginia. Shares of KB Home are in a clear downtrend since around September.

The stock is now failing at the 50-day moving average of $12.80 and is approaching an area of triple support at around $10.60 a share. If the stock breaks below this level it could be setting up to trade all the way back to $7 a share. Bears are leaning all over shares of KBH, with over 17% of the float sold short. The bears seem to be short this stock for good reason, when you consider the trend on the chart.

3. Home Depot

Looking for a home improvement retailer? Consider Home Depot (HD). Home Depot, together with its subsidiaries, operates The Home Depot stores, which are full-service warehouse-style stores. Shares of Home Depot have formed a triple-top chart pattern at around $25.50 a share. The stock has now crossed below the 50-day and 200-day moving average, which is a bearish indicator. Shares of HD look ready to drop significantly to the next level of support at around $17 a share.

Conformation of this downtrend would be even clearer if the stock fails at near-term support of $21.30 a share.

4. Simon Property Group

One last must-see chart in the housing and real estate complex is Simon Property Group (SPG). Simon operates from five retail real estate platforms: regional malls, Premium Outlet Centers, The Mills, community/lifestyle centers and international properties. On Friday, the company reported a 28.6% jump in fourth-quarter profits, but issued a cautious outlook for its 2009 earnings. Looking at the chart below, you will see that there isn’t a single reason to be long this stock. Shares of Simon have been in a clear downtrend since September and the stock has failed every time it reaches the 50-day moving average. Watch for SPG to break below $34 a share. A breach of that level would most likely lead to another significant move lower.

To learn about a few more housing stock charts that look compelling now, visit the Charts of the Week portfolio.

Also, if you want to improve your own technical stock-picking skills, you can share ideas and pick up some tips on Stockpickr’s technical-analysis forum.

Posted on Jan. 30, 2009