Looking for some trades in the homebuilding group? Here are several! Look at $XHB $LEN $DHI $TOL $MDC $HOV and $LGIH (September 02, 2021)


Download Video || Download Fast Video

I want to go over the Homebuilders ( NYSEARCA: XHB ) today. There are some of these stocks that are in a pretty good situation. This is forming a pretty nice base here, it’s a high base. You could say it’s starting around here, it’s starting to look like a cup and handle here or a potential cup and handle. Now, there’s no handle so we are just looking for this kind of thing.

If this would stay below $80.00 for a while and then break out, now we would really have something. So I wouldn’t be buying this stock here, you are kind of too late to buy the dip and too early to buy the breakout. So it is really more of a higher-risk trade simply because the potential reward is uncertain.

Either way, you are not going to go wrong because you are only risking 4 or 5 percent on the downside. If you do just say, well just screw it, let’s do it. I am going to buy it because I think the stock is going to break out. Then if it turns out that you are wrong, the stock pulls bank instead. You have got to put a BAND-AID on, not a tourniquet, and so that could work. Again, I would coach you not to do that. You either wait for the stock to pull back closer to say, the 50-day moving average or you wait for a bona fide breakout.

Now, if we look a some of the stocks in this group, Lennar ( NYSE: LEN ) has kind of a similar look. It’s very similar and so I would kind of look at this in the same way. Here, I would really need to see it either break out above 110.00. They report earnings on the 13th, so just eleven days from now. I would look for it to break out above 110.00 on volume or pull back say, closer to 105.00, 104.00, something like that. I don’t think you are going to pull back to 100.00.

Another stock that I am looking at is Hovnanian ( NYSE: HOV ). Notice the liquidity, there is none. The stock, at 73 thousand shares, you can put in an order to buy the stock at a limit price and then go have some lunch. And then maybe it will be filled when you get back. It just really doesn’t trade that much but the pattern is the pattern.

You can consider this, M.D.C. Holdings ( NYSE: MDC ) or Richmond American. This is a pretty nice chart pattern too. So I am really looking for more of a break out on these home builders. DHI ( NYSE: DHI ) is giving you the same exact thing. Again, all the chart patterns are a little different but the similarity is, that they have all basically been forming bases for quite a few months. And now on some of these like this, it is actually narrowing a bit.

And then you look at Toll ( NYSE: TOL ), that doesn’t work for me. It is kind of up too much, it doesn’t work for me. That would have been a 2-weeks ago thing, not a “now” thing. The bottom line is, there are a lot of ( NASDAQ: LGIH ) good potential trades in the Homebuilding ETF. If you just want to trade the XHB ( NYSEARCA: XHB ), that will be your smoother trade because everything gets kind of averaged out.

What I would suggest doing is, looking at the stocks that I just mentioned; writing notes, putting stock alerts on there so that you can be taking action on a stock when it does what you are thinking it’s going to do. As opposed to taking action on a stock and then hoping that it does what you think it’s going to do.

Free Chart

Leave a Comment