Dead Cat Bounce on KB Home (KBH)? (January 13, 2015)
One of the things I’ve been looking at is homebuilder’s. I know that homebuilder’s have been moving, they’re one of the best performers of the year so far, though the year is just getting started; we may see a little change in character here.
KB Home ( NYSE:KBH ), one of the big one’s that I follow, reported some, let’s just say not to good numbers and the stocks down 16 percent. Here’s the deal with this, this was the last low at 13.75, the stock closed slightly above this low here after trading down below that level. Let’s look at the intraday moves. A big move right here intraday, word gets out, stock drifts lower, but then towards the end of the day it starts to drift higher.
I think this is right for a dead cat bounce; it’s actually a really low risk trade for you to make. This is what I mean: we’ve got the close here, and we’ve got the low right there, that’s less than 4 percent between where you would buy it, and it’s probably going to open up a little bit higher, and this low here of 13.40. So you could buy this stock here, I would say $14.00, in fact I’m going to set a price alert for our members. If the stock gets up above 14.00 this is a stock that you’re going to want to be buying just for a dead cat bounce.
By the way one of the things we do, for you non-members, we actually segment out our videos so that if something that I’ve said about a particular stock, like here $14.00 is a key level, if that’s actually triggered our members will receive an email and they will receive this part of the video so they know what to do, or at least they know what the potential trade setup is. So if this stock moves above $14.00 you’re probably going to want to buy it.
The other thing is the low of 13.40, I’m also going to set an alert there, the reason is because if the stock starts falling below yesterday’s low you want to watch that too, because obviously then the stock’s moving lower; fine, the lower it goes the more likely it is that it will, at some point, rally. It will at some point move higher so we want to keep track of this stock.
I don’t want to buy it down here, I want to buy it if it goes below 13.40 and then starts moving higher again, and so the trigger for me to watch it is 13.40. The action would be then if it starts trading back above that level. If the stock starts trading above $14.00, at that level I want to buy this thing for a dead cat bounce. That’s how I would trade KB Homes ( NYSE:KBH ).
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