Gems in a bear market rally: The homebuilders
Continuing with my search for stocks to be bullish on (before I turn decidedly bearish as the S&P approaches 2625), I arrive at the homebuilders. Much like ANF (as highlighted in my last idea), homebuilders did not really enjoy the fruits of a massive rally over the past 10 years.
In the chart above, we see TOL has formed an almost perfect bullish triangle and has broken out above it during Friday's price action. Fundamentally, our current rally is being fueled by a supposedly dovish Fed (although I would argue that Powell is not actually dovish) and lower interest rates means more homes being financed and bought.
Similar bullish patterns exist in PHM, BZH and LEN so I think the whole sector is buyable here.
Buy TOL here at $35.33 with a target price of $38.75 and a stop of $33.80.
In the chart above, we see TOL has formed an almost perfect bullish triangle and has broken out above it during Friday's price action. Fundamentally, our current rally is being fueled by a supposedly dovish Fed (although I would argue that Powell is not actually dovish) and lower interest rates means more homes being financed and bought.
Similar bullish patterns exist in PHM, BZH and LEN so I think the whole sector is buyable here.
Buy TOL here at $35.33 with a target price of $38.75 and a stop of $33.80.
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Solid price action today after LEN reported this morning. KBH is up after hours which might lead to further gains tomorrow. That being said, a trailing stop is best in a bear market rally like this. I'd also reduce my target to the $37.50-$38 range.