“Sales of new homes plunge to lowest level in 16½ years,” reports the Commerce Department, throwing another log of bad news onto the burning housing market. And by the time you read this, we’re sure another story of the weak housing market will hit the newswire. It’s what makes the current strength in shares of Home Depot so interesting.

During the great credit crisis of 2007, Home Depot led America’s “consumer sensitive” stocks off a cliff. Shares in America’s largest home retailer fell from $40 to $25 in just seven months. But despite horrible housing headlines, the Depot has refused to break its January low.

We don’t know if the worst is over for the U.S. economy. But we can look to stocks like Home Depot for clues on how things will turn out. Home Depot lives and dies by America’s ability to spend money on roofing, room additions, and lawn supplies. If folks aren’t spending money on the American dream, we’re in trouble. Unemployment claims are likely to keep rising, and housing numbers are likely to keep sinking. But stocks tend to look six to 12 months ahead and price themselves accordingly. Right now, Home Depot is casting its ballot with the “things aren’t so bad” camp.