Two Homebuilders that are working. $TOL $LEN – October 1, 2024
This is Scott McGregor at Scott Trades on Twitter with StockMarketMentor.com and your Chart of the Day. I want to take a look at some Homebuilder stocks. Despite everything that happened today around the world geopolitically the Homebuilding ETF ( NYSEARCA: XHB ) is still in a strong well-defined uptrend, and above all the major moving averages.
So when days like today happen, where we see the S&P 500 close under the 8-day exponential period moving average; when we see the QQQ ( NASDAQ: QQQ ) close under the 8-day exponential period moving average, and general market weakness, we go on a hunt for relative strength. We’re finding that here in the Homebuilders ETF ( NYSEARCA: XHB ).
So let’s look at two Homebuilders that I think are actionable in this market. We’ll start things off with Toll Brothers ( NYSE: TOL ). Like the Homebuilders ETF ( NYSEARCA: XHB ) Toll ( NYSE: TOL ) is in a well-defined uptrend and above all the major moving averages. Using the orange line, that’s the 8-day exponential period moving average as a support level. Every time it comes down to the 8-day, even today, buyers stepped in to support this stock.
So this, in my opinion, is a stock that is continuing to be in a well-defined uptrend and buyable as long as it can hold up above that 8-day exponential period moving average I’d look for a break higher and a breakout alert right above 155.00, maybe just under 156.00. And look for a strong move through 156.00, coming on volume.
In this market environment, it’s not likely that a breakout like this is going to happen. And so that’s why you’d want to set an alert and have that alert for about a month or so just to keep it on your radar. That way, in the near term, if it does break out you’re ready for it. It’s also good to see that this stock here doesn’t have earnings until December.
Another homebuilder that looks pretty good is Lennar ( NYSE: LEN ). Lennar ( NYSE: LEN ) is also in a well-defined uptrend and above all the major moving averages. Lennar ( NYSE: LEN ) is a bit wider and looser. It’s using that 21-day exponential period moving average as a bit of a support zone, a bit of a bounce zone.
We did get a few closes under the 21-day but it was able to get back above and hold above. So this looks okay, as long as it can hold above that 50-day moving average. I think the 50-day moving average on Lennar ( NYSE: LEN ) is much more important. And so with a stock like this, you definitely want to trade a little smaller just because you’d have a much wider stop loss because of the volatility. But trend-wise, Lennar ( NYSE: LEN ) looks fine, as long as it can hold up above these key moving averages.
Those are two stocks that are showing some relative strength in this market. And even though, geopolitically, it’s probably not a great time to put money to work, it’s definitely a great time to continue to build a watch list of strong stocks.
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