Along with the financials, the gains in homebuilding stocks have
been another sign that the economy, slowly but more surely than
many expected, is on the way back. And with many of those who have
enjoyed the rallies in these stocks now starting to take profits,
potential short-term opportunities for traders and active investors
alike may await in any coming weakness.
Dropping by nearly 5% in Thurday's session, the pullback in
Beazer Homes USA
) was easily among the sector's most dramatic retreats. The selling
reverses most of the stock's previous two-day gains, and while BZH
is trading near short-term lows, the stock is still significantly
in neutral territory, underscoring its 6 out of 10
That said, Beazer Homes USA has a positive, short-term edge of
just over 1% ahead of trading on Friday.
) also had not yet finished in technically
territory, despite closing lower for three days in a row. With a
positive edge of three-quarters of a percent, LEN earned a
two-point ratings upgrade late in trading on Thursday, and is set
to open Friday morning with "consider buying" ratings of 8 out of
Shares of Lennar last earned "consider buying" ratings in late
January. The stock gained more than one and a half percent after
the first day, and was up more than 8% in just three days.
Also closing lower for a third consecutive trading day on
Pulte Homes Inc.
) lost almost 2% - though finishing well off session lows. As such,
PHM has the smallest, positive edge of the homebuilding stocks in
today's report, earning a modest
of just over half a percent. Pulte does share with Lennar a
"consider buying" rating of 8 out of 10 and, like Lennar, responded
swiftly and strongly the last time it earned a rating upgrade to
"consider buying" status in late January.
Traders less interested in individual potential stock
opportunities and more focused on the sector as a whole will want
to keep an eye on the
S&P Homebuilders SPDRS ETF
). XHB closed in oversold territory above the 200-day moving
average on Wednesday and is up more than half a percent after
Coming Spring 2012: the second edition of
How Markets Really Work: A Quantitative Guide to Stock Market
by Larry Connors and Cesar Alvarez.
to learn more.
is Editor in Chief of TradingMarkets.com