Homebuilders — Good news and bad news in the same week. Buy or sell? Let’s look at XHB, PHM HO..
Discussed in this article: Hovnanian Enterprises Inc. Cl A ( $HOV )
I want to look at some homebuilding stocks in this free video; it will only take a second. There has been a lot of data, positive and negative, over the last week and what’s really happening with the homebuilders is that it’s starting to really perk up. This has not been an exciting sector, I think the biggest deal as far as these stocks go, I’m not bullish on the home building industry, I’m not bullish on the real estate market frankly, but do you think the charts care what Dan’s bullish or bearish on? They absolutely are not, they don’t care, but when I look at this, this has not been a real interesting sector at all, but the XHB ( NYSE:XHB ) is forming a nice little cup, I’ve talked about this before, I’m not really sure if it was in this forum, but definitely in the webinar for members last week and various other times.
This is looking like it’s ready to kind of blow; the way I have described this sector is it’s quote, “interesting”, it’s interesting, it’s not like, oh, you’ve got to buy it, it’s interesting. Well it’s kind of getting to the point where it’s a little beyond interesting and it’s starting to be the kind of stuff that I think you want to buy. Nobody can say that the homebuilders have run up a lot this year, they really haven’t, particularly over the last eight months or so. But look, the XHB ( NYSE:XHB ), it’s actually in a pretty good buy point right now. This has been a very, very prolonged base. The other night in the webinar one of my members asked what I thought about HOV ( NYSE:HOV ), and I haven’t looked at Hovnanian ( NYSE:HOV ) in a long time, so I looked at the chart I said, “Wow! This just instantly became my favorite homebuilding stock.” This is a really nice volatility squeeze here; I’m not going to say that you’re too late if you’re chasing it because that’s the nature these expansions.
When a stock is compressed from a volatility standpoint, in a really tight trading range and then all of a sudden it breaks out, you just don’t know how high it’s going to go. So I’m looking at Hovnanian ( NYSE:HOV ) and this is working, and then I look around and I say, “Okay, well I want to know if this is a sector that’s working.” And of course we see the XHB ( NYSE:XHB ) and that’s looking pretty enticing, I think you can buy that now. Then I look at Pulte Home ( NYSE:PHM ), this the “Big Dog” in the homebuilding industry, this is coiling right below the 200-day moving average. Look at the set up here on the moving averages; 50-day up, 200-day just kind of flat, this a little triangle pattern, it just begs for a breakout. The Fed is not going to be raising interest rates any time in our lifetime, and I plan on living a long, long time, and that will definitely improve the investing sentiment in these homebuilding stocks; I think that’s some of what we’re seeing here.
And then the last one I want to mention is Beazer ( NYSE:BZH ). Now this looks like it’s run quite a bit but it really hasn’t, the charts just kind of choppy. When you zoom out you can see it’s been trickling sideways for quite a while, but this is a really nice uptrend in the stock right now, just over the last month or two. So I think that you can buy, probably chasing a little bit here on Beazer ( NYSE:BZH ) because it’s right up against this resistance, frankly it looks a little bit like Facebook ( NASDAQ:FB ) did, but I think you can wait, hopefully you get a weekday to buy Beazer ( NYSE:BZH ). Hovnanian ( NYSE:HOV ), the daily chart shows its still got some juice to go. The XHB ( NYSE:XHB ) I think works, and Pulte Homes ( NYSE:PHM ) works. So I think all of these stocks are going to work for you. I would not load the boat, I don’t think you want to do that anyway, you never want to do that on any one trade or in any one sector. These are not stocks that have been running, but if you’re looking for places that money may wind up going after the first to the year, this could be one sector.