Home Building Stocks Approach The Ceiling
Believe it or not, the home building stocks have been surging higher since October 4, 2011. Since that time, this sector has climbed higher by 50 percent. Many leading home-builder stocks have rallied even higher. On October 4, 2011 the SPDR S&P Home-builders ETF (NYSE:XHB) was trading as low as $12.21 a share. Last week, the XHB closed at $18.43 a share. This is a terrific rally for a sector that is supposed to be depressed. This week we shall examine three leading home-builder stocks and find the near term resistance levels.
D.R. Horton Inc (NYSE:DHI) is one of the leading U.S. home-builders based out of Fort Worth, Texas. This stock was trading as low as $8.03 a share in early October. Last week, the stock closed at $13.91 a share. Traders must watch for very important chart resistance around the $15.00 area. The stock is now reaching short term overbought and extended levels. Traders that are looking to own DHI stock should now wait for a pullback, or a consolidation pattern to form on the charts. Should the stock pullback from the current levels traders can look for daily chart support around the $12.00 area.
Pulte Group Inc (NYSE:PHM) is a leading U.S. home-builder that is based out of Bloomfield Hills, Michigan. This stocks was trading as low as $3.29 a share on October 4, 2011. Last week, the stock closed at $7.62 a share, this is a gain of more than 100 percent in just three months. Traders must watch for important near term daily chart resistance around the $8.00 level. Should the stock trade above and through that area the next important resistance point will be around the $8.50, and $9.10 levels. Should PHM decline from current levels the stock will have very strong daily chart support around the $6.00 area.
KB Home (NYSE:KBH) is another leading U.S home-builder stock that has soared over the past three months. KBH stock has surged higher by nearly $4.00 since early October 2011. At that time, the stock was trading as low as $5.02 a share, last week the stock closed at $8.83 a share. The stock is approaching the weekly chart 50 moving average at $9.42 which is going to be near term resistance. Should the stock continue to climb above that important resistance level the next resistance area will be around the $11.00 level. It is important to remember that the stock is already trading into important resistance and may need to pullback first before climbing higher. Should the stock decline from current levels there will be good near term support around the $6.75 level.
All traders should remember that the corporate earnings season is upon us. Therefore, traders should always check for earnings when looking to trade a stock during this time. It is always very risky trading ahead of earnings.