Home-builder Activity Could Be A Warning Sign – TOL, LEN, DHI, PHM

Today, the leading home-builder stocks have rolled over a bit after the Case-Shiller survey. The Case-Shiller survey reported a 10.9 percent increase in home prices in March, this was the highest increase since April 2006. Initially, the leading housing stocks popped on the news, but since that time these leading housing stocks have reversed and traded lower throughout the afternoon.

Two of the most important home-builder stocks that any trader can follow are Lennar Corp. (NYSE:LEN), and Toll Brothers Inc (NYSE:TOL). Both of these stocks have faded sharply from the opening bell. LEN stock is trading lower by 0.65 cents to $42.14 a share. Day traders should watch for intra-day support around the $41.40 level. Some other leading home-builder stocks that have faded from the morning highs include DR Horton Inc. (NYSE:DHI), and PulteGroup Inc (NYSE:PHM).

The home-builder stocks have led the major stock indexes higher since October 4, 2011. This leading industry group has benefited from record low yields. Today, yields on the 10-year note are higher by 0.124 to $2.135 percent. Higher yields on the 10-year U.S. Treasury Note could stall out the housing boom. Private equity firms have also been buyers of single family homes which has helped to take excess inventory out of the market. The Federal Reserve has also been buying about $45 billion a month worth of mortgage backed securities. All of these stimulating factors have helped to rally the housing stocks over the past year. Any sharp rollover in the housing sector could be a warning sign that this current stock rally could be coming to an end.

About Nicholas Santiago 575 Articles

Affiliation: InTheMoneyStocks.com

Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets.

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