Lennar (LEN) closed up 2% today! Great, right? No. Not so much. (June 20, 2017)
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I want to look at Lennar ( NYSE:LEN ) today. Big news this morning, the company reported earnings, beat estimates. The stock gapped up 4, almost 5 percent. This is the thing, I think you have got to sell the stock. Should have sold it this morning when the gap didn’t hold. We can look at this as a really bullish pattern, and it is. We will look at the weekly chart, you can see, it has been trading sideways forever and then finally broke above 50.00, now it is support around 50.00 and I would say the trading range is, guess what? Right here, which is not any higher than this one back here.
I think your next buy signal is when the stock breaks back ABOVE 55.00 and it isn’t there now. It tried this morning and it just fell back. The entire housing sector ( NYSEARCA:XHB ) was up on Lennar’s ( NYSE:LEN ) news and then this is pulling back. I think this is a sign of overall selling in the market. The Advance-Decline line is down, lower high and lower low versus the S&P, which is a higher low and then pulling back.
We are getting some divergences in the market and when I see Lennar ( NYSE:LEN ) do this, it is not surprising when you see a stock gap up so high; but when I see a stock do this, the fact that it closed up 2 percent, that might be fine for financial news networks to say, “Oh, one of the top gainers was Lennar, which reported great earnings and closed up 2 percent.” Dude, I look at this as a bad thing for the bulls. Because the stock opened up in the morning, check this out, traded down, by 10:00 that is all she wrote. Up and then down. Homebuilders ( NYSEARCA:XHB ), same thing.
We are getting this resistance here, we are getting this distribution, I don’t want you to be anywhere near this. Now I reserve the right to change my mind in a week or two, but I promise you this, if that is the case it is because the stock is down here and I am looking at this as a low-risk buy point. Right now, I just think the stock is in jail and it is probably going to be going down to a lower floor.
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