Homebuilders Ready for a Bounce?

George Brooks |

The most significant thing about yesterday’s trading is the market tried to go down but couldn’t.

    There was no panic to sell.  But buyers are wary, opting to wait for more clarification from the Fed on QE.

   In the interim, the market will try to rally, and the strength of that rally must be monitored closely.  If  the rally is brisk and the DJIA breaks up through 15,450 (S&P 500: 1,694) a further correction will have to wait,  If the  rebound is pained and unimpressive, the market needs to do more work, i.e., lower prices, or a sideways-to down consolidation.    

   At some point, the Street must graduate from its ridiculous “bad news is good news” mentality to “good news is good.”

  That is what is needed  to sustain the next major up leg in this bull market, not  an investment community that  shows up hat-in-hand  asking the FRB to continue its hand holding.

   A break beyond  resistance mentioned above  is critical  to the near-term direction of the market, BUT a rally failure is unacceptable, a one-day spike that gives back all of a good day’s gain. The next resistance level would be DJIA 15,498 ((S&P 500: 1,698).  

   Abreak below DJIA 15,345 (S&P 500: 1,680 would be  a bad sign.                                                                                            

Investor’s first readan edge before the open

DJIA:  15,419.68

S&P 500:1,689.47

Nasdaq  Comp.:3,669.95

Russell 2000:  1,053.07

 Tuesday, August 13, 2013     (9:05 a.m.) 

   TECHNICAL OBSERVATION – STOCKS:

The following are observations based on solely on technical analysis and don’t give consideration to fundamentals or changes in brokerage ratings which can  have an immediate impact on stocks, justified or not.  The idea here is to give readers insight into the likely trends and turns in the stock’s price, short-and long-term.

   I picked up on AAPL and FB last year when they were in a tailspin, on IBM recently for the same reason and am including Pulte, since it has been in a  pronounced slide.  These are not to be construed as  buy or sell recommendations.

   Apple(AAPL: $467.36)

Buyers in-size showed up before the open and were there throughout the day cementing the $453 level as solid support. Next move could be across $474 en route to $480. The pattern has changed here from persistent (but patient) sellers to  buyers on dips.

   Facebook (FB - $38.48)

Resistance  has been trending lower from $39 to $38.40, but support is consistent at $38.15, a descending triangle that can be reversed with a high-volume  break out above $38.50.

  FB should consolidate with support in the $35 - $36 area, the fundamentalists may not wait for a drop to that level.

IBM ($187.76)

Three days of stability suggest IBM can bounce technically to the $192 - $194 area where resistance should be formidable. A break above $189.80 would pve the way.

Foreseeable risk is $174.  Institutions may simply sell to free up cash for other stocks with more immediate potential. Each point down impacts the DJIA by about 13 points.

PulteGroup (PHM- $15.67)  WATCH closely, turn possible.

Today: There is resistance at $15.90.  A spike in  volume in the final hour of trading could be significant and indicate buyers are entering the group. A comparable spike in volume in late day trading occurred in Lennar (LEN) and DH Horton (DHI) Watch closely.

   Home builders have taken a pasting and Pulte is no exception down 35% from its  May high. More slippage is possible, especially if the  overall market  drops. A dip below  $14 is possible, but it would have to have help from a plunging market.

Housing Starts will be reported at 8:30 a.m.,  Friday. 

   HOME BUYER BUYING PANIC ?

Mortgage rates rising, home prices rising, inventories decreasing !!

The calendar for economic reports is heavier this week, especially Thursday (see below).

   For a detailed account of past and current economic reports, including charts go to: mam.econoday.com

MONDAY:

Treasury Budget (2:00)    July’s budget deficit for July was $97.6 billion. The fiscal year deficit is now $607 billion, down 38% from a year ago.

TUESDAY:

NFIB Small Business Optimism (7:30)  Proj.: 94.5 July after 93.5 in June

Retail Sales (8:30)   Proj.: +0.3 pct July after  a gain of 0.4 pct on June. Excl.  motor vehicles +0.4 pct

Import/Export Prices (8:30)  Proj.: +0.9 pct July

Business Inventories (10:00)  Proj.: +0.2 pct

WEDNESDAY:

Producer Prices(8:30)   Proj.: +0.3 pct July After jump of  0.8 pct in June.  Excl. food and energy +0.2 pct

THURSDAY:

Jobless Claims(8:30) Proj.:  330,000 (8/10) vs. 333,000 prior week

Consumer Price Ix. (8:30)  Proj.: +0.2 pct July, same for ex-food/energy

Empire State Mfg. Svy.(8:30)   Proj.:  10.0 for Aug. vs, 9.46 July

Industrial Production 9:15)   Proj.: +0.3 pct July, Mfg component same

NAHB Housing Market Ix.(10:00)  Proj.:  56 for  Aug

Philadelphia Fed Svy (10:00)  Proj.:  15.0 for Aug. vs. 19.8 in July vs. 12.5 in June

FRIDAY:

Housing Starts (8:30)   Proj.: 0.900 million-unit rate. Permits 0.935,000 July.  June starts were down 9.9 pct after an 8.9 pct jump in May

Productivity and Costs (8:30)  Proj.: +0.6 pct

Consumer Sentiment(9:55)   Proj.: 85.5 for Aug vs. 85.1 July

www.mam.econoday.com.

RECENT POSTS:   2013

July 31 DJIA 15,520  “Has the Market Discounted a Fed Policy Change ?”

Aug  1 DJIA 15,499  “Dear Fed, Lay It Out There, We Can Handle It”

Aug  2 DJIA 15,628  “Street Must Taper Out of Reliance on Fed Stimulus”

Aug 5  DJIA 15,658  “August/September Correction Looms”

Aug 6  DJIA 15612   “Market Doesn’t Need Reason to Correct”

Aug 7  DJIA 15,518   “Uncertainties to Plague Market Until September”

Aug 8  DJIA 15,470    “DJIA 14,250 by Early October, or Worse

Aug 9 DJIA  15,498   “Has a Correction Already Started ?”

Aug 12, 2013 15,425  “Taper, A Withdrawal Process From Addiction”

  George  Brooks

“Investor’s first read – an edge before the open”

sensiblesleuth@gmail.com

……………………………………………..

The writer of  Investor’s first read, George Brooks,  is not registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk. Brooks may buy or sell stocks referred to herein.

 

 

 

 

 

 

 

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
LCAR Lescarden Inc 0.02 -0.00 -21.05 10,000

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