Homebuilder Stocks BZH MTH HOV Rally into Daily Resistance
Wed, Sep 8, 2:41 PM ET, by Corey Rosenbloom
A lot of traders have been puzzled lately by the strength in homebuilder stocks in the face of some of the worst economic data that just came out about the housing market. Remember, the stock market is (generally) a leading indicator of economic activity so perhaps the poor news was already “baked into” the price of homebuilder stocks. Now that a rally has taken place, key leading homebuilder stocks have rallied into critical resistance areas that are “Make or Breaks” between a resumption of a devastating downtrend… or a reversal up to higher prices. Let’s take a quick daily chart look at the price action of Beazer Homes (BZH), Meritage Homes (MTH), and Hovnanian Enterprises (HOV – the smallest of the bunch) to see each respective overhead resistance level to watch. Beazer Homes (BZH): 
What you’ll see in each of the charts of the homebuilders are the following: 1. Sharp price collapse after peaking in late April 2010
2. Positive momentum divergence and ‘bottom’ in July
3. “Strong” rally so far in September
4. The rally pausing right now into key overhead resistance That will save you some time in analyzing the charts. Right now, the most important thing to note on each chart is the respective move into overhead resistance. In the case of Beazer Homes, the area to watch is $4.50, which reflects a prior price high, trendline, upper Bollinger, and 200 day SMA. Any price push above $4.75 would be a strong bullish confirmation signal that would suggest the strength we see in September will carry price to higher levels. If not, then lower prices are ahead. Meritage Homes (MTH): 
In Meritage Homes, the price level to watch is the $19.50 confluence overhead resistance area via the 200 day SMA, upper Bollinger Band, and minor ‘polarity’ (prior support) from the April lows. Any confirmed breakout above $20.00 per share should lead to a continued price push higher – and if not, look to see $18.00 per share or even lower. Hovnanian Enterprises (HOV): 
For Hovnanian, the level to watch is between $4.00 per share and $4.25 per share. That level reflects the falling 50 day EMA and horizontal trendline. To confirm a true breakout in HOV, buyers need to see a clean price breakout above the 200 day SMA at $4.50 and then above the prior high from August at $4.75. Thus, a break above $5.00 would be the official upside bullish trigger. Keep watching these stocks for clues if price will breakout above resistance – or fail to overcome the confluence levels above. It should give clues about what investors think about the broader stock market. For reference, here are the resistance levels to watch in two other leading homebuilder stocks: KB Homes (KBH): Prior Price High (and polarity) along with the upper Bollinger at $12.00 Toll Brothers (TOL): Prior Price Level at $18.50 and 200 day SMA at $19.00
Note – TOL – like MTH – just recently broke the September high but still faces key resistance Corey Rosenbloom, CMT
Afraid to Trade.com Follow Corey on Twitter: http://twitter.com/afraidtotrade
 blog.afraidtotrade.com
SDI Glossary: "price" Definition
SDI Glossary: "TA" Definition
This Article's Word Cloud:
April
Beazer
Bollinger
Enterprises
Homes
Hovnanian
Meritage
Price
September
about
above
afraidtotrade
area
between
breakout
bullish
chart
charts
confluence
each
economic
from
have
high
higher
homebuilder
into
just
leading
level
levels
look
lower
market
overhead
price
prior
rally
reflects
resistance
share
should
stock
stocks
strength
that
upper
watch
will
would
More articles: 1 2 3 4 5 6 7 next »
| 
RSS