ANALYSIS: hov, dhi, len, phm

So I've been a little busy since this last summer, so I haven't updated in awhile. I've still been following the markets though! The last post on RRGB actually was a pretty good trade, and I was able to get a good 20% out of it. Right now I'm currently in MSFT, AA, and BAB. I'll make a post on why I'm in there a bit later. For now, I wanted to talk about home builders, which I've been keeping an eye on in the last couple of months.

Home builders have taken huge hits this past summer with the whole housing bubble burst; Hovnanian, Pulte, KB Homes, and DR Horton have all dropped anywhere from 30% to 50%.



However, you can also notice that after a certain period of flatness (I'm getting real technical here), the stocks have slowly started to climb back up. Technically, this looks a lot like a round bottom, which is just what it sounds like. Fundamentally, this pattern also suggests that the housing market has finally hit a bottom. Back in September and October, I repeatedly read about the lower-than-expected housing orders for the month, yet I never saw these stocks in the red following the news. It looks now that the housing market is slowly recovering from the exaggerated sell, and I would suggest looking into some of these homebuilders.