Just when you though it was safe to factor a housing bust into your investment outlook, lo, the shares of the homebuilders explode like gas from a bloated corpse. Here’s what it looked like on Friday, a veritable gusher of exuberance recorded by the PHLX Housing Sector Index:

(Click om chart to enlarge)

The builders’ shares had been moving up strongly for the last week or so, but we were still surprised at how easily they punctured not one, but two important prior tops on the daily chart. This occurred in the first hour on a gap opening, and it means that the entire rally from early March’s bottom can be considered as a single, powerfully bullish impulse leg. It all but ensures that any weakness from these levels or above is likely to be temporary, a prelude to yet another bullish surge.

Given the importance of the homebuilding industry to the U.S. economy – face it, the housing sector is the economy – it seems highly unlikely that we’re about to experience a downturn. Not if homebuilder shares are just beginning a bullish cycle that could take as long as 8-10 weeks to play out.