Home Builders Take Off in Reaction to LEN Earnings... We Favor DHI

Below is what we discussed back on Aug13 (20.36).

Since then, DR Horton Inc. (DHI) has carved out an Aug upleg that exhibits bullish form (19.99 to 22.09) followed by a pullback to 21.03 (Sept 3), followed by an upside pivot that has propelled DHI to a new post-Aug recovery high at 22.49.

My near- and intermediate-term work argue that current strength represents the initiation of a new upleg that should send DHI towards a test of key resistance 24.00-24.80 next. MJP 9/17/14

My BIG picture pattern work in DHI (large U.S. home builder) indicates strongly that the action so far in August represents the conclusion of a deep corrective process in the aftermath of the initiation of a new up-phase after the Oct 2013 corrective low at 17.59.

All of the action during August so far is a bottoming period of the most recent downleg from the July 1 high at 25.19 into the 20.00 area most recently.

Yesterday in fact, JPMorgan Chase & Co. (JPM) acted as the broker for a 13.4 million share block offering that was priced at 20.25, which could have precipitated a larger exodus that took out the Aug low (12.99), but failed to do so, indicating that DHI is exhibiting improved relative strength in and around the 20.00 level.

The stock is on my watchlist now. MJP 8/13/14

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