Some Home Builders are Putting up Flagpoles

The homebuilder stocks have been working higher for about a year. Many are of the view that they have run their course and are ready to to pullback. Where Beazer Homes, $BZH and DR Horton, $DHI appear to fit that bill, the weekly charts of two others Lennar, $LEN, and Toll Brothers, $TOL, are exhibiting classic bull flags. Take a look.

Lennar, $LEN

The chart for Lennar, $LEN, above, shows the tight consolidation between 29.50 and 32, in the blue box. What makes it interesting is that the volume is decreasing as it consolidates and the Relative Strength Index (RSI) is running flat in bullish territory with a Moving Average Convergence Divergence indicator (MACD) that is also flat. These add up to the bull flag, where buying and selling pressure are exhausting each other. A Measured Move higher takes it to 38 on a break above 32. The chart for Toll Brothers, $TOL, below has the same signs. Consolidation of price in a tight range between 28.50 and 31.20 with declining volume but a RSI and MACD that are running flat. The Measured Move higher in this name takes it to 37.40. If you have missed the rally in the homebuilders your opportunity may be coming up very quickly. Keep these two names on your watchlist for an entry on the breaks of the flags.

Toll Brothers, $TOL

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog