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Homebuilders Are Holding Up, How Much Is Left In The Tank?



November 15, 2011 – Comments (0) | RELATED TICKERS: TOL , KBH , LEN

The homebuilding stocks have been classified as bad as airlines stocks over the past five years. These stocks were the market darlings from the year 2000 into August 2005. Since the 2008 stock market crash the homebuilder stocks have been considered the ugly ducklings or rather dogs with fleas. Regardless of how you may feel about this stock sector the leading homebuilder stocks have surged higher since the October 4, 2011 stock market low.

Toll Brothers Inc (NYSE:TOL) is considered the best homebuilder because it caters to affluent clients. This stock traded as low as $13.16 a share on October 4, 2011. This afternoon, TOL stock is trading higher by 0.40 cents to $19.30 a share. The stock is now trading above the important daily chart 200 moving average which puts the stock in a strong technical position. Swing traders should watch for near term resistance around the $20.25, and $21.30 levels. TOL stock will have intra-day resistance around the $19.50 area.

Other leading homebuilder stocks that are doing well recently include PulteGroup Inc (NYSE:PHM), KB Home (NYSE:KBH), Lennar Corp. (NYSE:LEN), and DR Horton Inc (NYSE:DHI). These stocks all look as if they could have short term strength. Traders must understand that these stocks are just short term trading vehicles and really nothing more. The best way to play the homebuilders is to simply follow the leader which is Toll Brothers. When Toll Brothers stock sells off it is prudent to expect the rest of the stocks in the sector to decline.

Nicholas Santiago

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