Is The Roof Falling In On The Housing Stocks?

This morning, many of the leading home-builder stocks are selling off at the start of the trading day. Earlier, the NAHB’s monthly confidence index signaled a decline in home-builder confidence. This was the third consecutive decline in this number. The home-builder stocks were one of the top industry groups in 2012. So far this important and leading stocks sector has been range bound on the charts in 2013.

One of the leading home-builder stocks that traders should follow is Toll Brothers Inc (NYSE:TOL). This company builds high end homes for affluent customers. Today, TOL stock is trading lower by 0.98 cents to $32.06 a share. Short term traders should watch for intra-day support around the $31.70, and $31.00 levels. The daily chart for TOL will have near term support around the $30.00 area.

Some of the leading home-builder stocks that are falling lower today include Lennar Corp (NYSE:LEN, KB Home (NYSE:KBH), DR Horton Inc (NYSE:DHI), and Hovnanian Enterprises Inc (NYSE:HOV). Traders and investors must remember that the Federal Reserve has been buying $45 billion a month worth of mortgage backed securities to help prop up the housing market. Many private equity firms have been buying single family homes from the banks over the past couple of years. These private equity firms turn these properties into rentals to satisfy the hot rental market. All of these actions could have been distorting the housing market condition. If these actions by the bankers start to fail it could spell trouble ahead for the economy which is dependent on the recent housing recovery.

About Nicholas Santiago 575 Articles


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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