Let’s look at the homebuilding sector, and zoom in on Lennar (LEN). (November 14, 2012)
LEN HD XHB XHB HD DHI TOL KBH PHM
Good evening I’m Dan Fitzpatrick at StockMarketMentor.com on Wednesday, November 14th. Look guys it’s an ugly market. The way to be is either on the sidelines or short, frankly. Today I just want to look at Lennar ( $LEN Lennar Corporation ). A couple days ago, actually when Home Depot ( $HD The Home Depot, Inc ) announced some pretty strong earnings and then traded back into the range, I suggested that you want to be long the homebuilders, excuse me, you want to be short the home builders; I was really looking also at this pull back here. Bottom line was, we’re getting good news out of the homebuilders, but the stocks weren’t reacting. I was looking at Lennar ( $LEN Lennar Corporation ) a couple days ago, right here, and I said, “You know, what? I think this is going to break the 50-day moving average; you want to be out of this name.” Well, yesterday I actually took one for the team, I noted this in our Strategy Session, I actually got short Lennar ( $LEN Lennar Corporation ), assuming yesterday that it would fall. It didn’t do that, instead it started bouncing a little bit and I thought, well in order to make myself appear very, very smart I need to make sure that the home, that the homebuilders continue to go down and the only way to do that, that I know, is to buy something, okay. So what I did yesterday was I bought literally a hundred shares of Lennar ( $LEN Lennar Corporation ) teeny, tiny, tiny position, but I’m thinking, if there’s one thing I know for sure, when I make a stupid trade I’m going to get paid for it in a big way, in a bad way. So I bought a hundred shares of Lennar ( $LEN Lennar Corporation ), sure enough, stock turns around today, I flipped that thing out for a small loss and now I’m short Lennar ( $LEN Lennar Corporation ). Whether you do it by shorting the stock or shorting puts, the bottom line is, I think this stock goes lower, nothing against Lennar ( $LEN Lennar Corporation ), they’re actually one of the best of the bunch, but they’re all really going down. You look at the Homebuilders ( $XHB SPDR S&P Homebuilders (ETF) ), that one got crushed, Home Depot ( $HD The Home Depot, Inc ) also reversed completely yesterday’s move on strong earnings; the hits just keep coming, D.R. Horton ( $DHI D.R. Horton, Inc ) you want to buy that? No, Toll Brothers ( $TOL Toll Brothers Inc )? No, KB Home ( $KBH KB Home )? No, Pulte Home ( $PHM PulteGroup, Inc )? No, so all of these things frankly, you need to be out of if you’ve been in them, you need to be just gone, get rid of them, that’s all I’m telling you, here listen, that’s me pounding the table saying to get out of the home builders, and if you’re looking for a pretty good candidate to short, look at this sector as well, because a lot of these stocks do appear like they’re going a lot lower. Anyway, that’s it for this Chart of the Day. Members get over the Strategy Session, we’re talking telecom, heavy equipment, you got it, you know we’re there. Okay, I’ll see you over there. Free Chart