Stock Chart Analysis BZH

Posted by downtowntrader | 3/18/2008 10:53:00 PM | 2 comments »

Stock Chart Analysis BZH

Beazer Homes USA, Inc. (Public, NYSE:BZH)

I'm not too enthusiastic about buying stocks after a 400 point Dow rally in a bear market, but it does look like things will head higher for a while. I don't think we got enough of a wash out to form a longer term low, but there are several indicators pointing to an intermediate term rally. In looking at possible sectors for a long trade, Homebuilders are sticking out as a group to me. Most of them failed to make new lows on this recent move lower in the markets, and in fact they may of set higher lows with bullish divergences on several indicators. Several are close to challenging breakouts, but BZH is looking to me like one that may of already completed a chart pattern breakout. While the clearing of the reverse head and shoulders is negligible, it did close above the neckline and most of the recent volume has been on up days. I don't think I would buy it tomorrow after an 11% move today, but it's worthb stalking for a pullback.

One point to add is this is a possible position trade, because this sector may be bottoming out even if the the bear market has a ways to go. Keep in mind that even though the housing market may still be in trouble, stocks lead the economy and much of what will happen in the future has already been priced in. It may be early, but in general, Homebuilders and Financials tend to bottom while the rest of the markets are still falling, due to the accommodative environment of falling interest rates.

Good Trading,


Joey

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2 comments

  1. Guru // 3:53 PM  

    Agree with you about homebuilders and wrote so about TOL in my blog, stockchartist.blogspot.com. But be carefully of stocks that are close to the absolute bottom, $0, because they will, by definition, always look like their forming bottom patterns.

  2. Anonymous // 3:00 PM  
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