Who Wants to Buy a Home, Anyone, Anyone….Beuller?

Turns out, no one. My in-laws are looking to sell their house on a swanky golf and river club near south of Tampa. It is a big home with 4 bedrooms and 4 bathrooms, a pool, a lanai and 3 car garage. It has been on the market for 3 months and they have had 3 people come to see it. Is it overpriced? Maybe, but it is more likely the area is over supplied with 3 equally nice houses within 200 yards of theirs also on the market. Who knows how many more in the whole complex.

So, KB Homes (ticker:$KBH) reported earnings this morning. They were expected to lose 27 cents/share on 223 million in revenue. In fact they posted a loss of $1.49 per share on only 196.9 million in revenues. What does that mean to the fundamentals of the stock price? Who cares. I already knew that housing is in a long term downtrend and no one is buying. It is the short term that matters from a trading perspective. Is there an opportunity? Let’s look at the chart.

This stock has been beaten up since mid January after retracing 61.8% of the down move from May to August 2010. After Monday it had come close to giving back 61.8% of that retracement as well but stopped just under the 200 day Simple Moving Average (SMA). The Relative Strength Index (RSI) was sloping lower and still not yet technically oversold, and the Moving Average Convergence Divergence (MACD) indicator was growing more negative. This was setting up for a continued move lower after earnings with support in the 11.79-11.88 area before a major fall to the 10.80-11.00 area and 10.25-10.35 below that. There is high short interest on this stock with 22% of the float short or about 4.7 days of volume to cover, so keep tight stops and pay attention if short. The immediate reaction in the premarket the stock is lower trading at 11.45 as I write this (8:19am).

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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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.

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