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The recent pull-back after last week's down market looks to have opened a great opportunity to carve out a position in housing stocks that have been in a steady up-trend. Lennar (NYSE:LEN), Toll Brothers (NYSE:TOL), KB Home (NYSE:KBH), and DR Horton (NYSE:DHI) are all up on Monday:

  • Lennar - Up 2.14%
  • Toll Brothers - Up 2.29%
  • KB Home - Up 3.85%
  • DR Horton - Up 2.51%

As a stock buyer, I own DR Horton because not only do I think it's a part of a general housing uptrend, but I have personal experience with their product/ It is a product that I would describe as "high quality." Therefore, I'm going to focus on why DR Horton looks like a good buy though it is certainly not the only one in a pool of good choices.

DHI as the chart illustrates has recently pulled back, but is again showing bullish strength on Monday. After running from $17 to $22, the stock has had a near 45% reloading pull-back right around the 50 day moving average.

(Click to enlarge)

If positive market sentiment about the housing market holds riding on the lower Bollinger band could signal a bullish turn to the upside. In fact, looking at a longer term chart DHI has repeatedly bounced off the lower Bollinger band each time it's pulled back or you can use the 50 day moving average.

(Click to enlarge)

I have a $45 target for TOL, a $45 target for LEN, a $25 target for KBH, and a $30 target for DHI. These all assume the economy avoids a fiscal cliff and the housing industry continues to rebound.

Disclosure: I am long DHI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Investors buy and/or sell at their own risk. I declare that I may trade any stock at any time mentioned in this article. For me "long" is until I sell. I do not "short" stocks. This article is for entertainment purposes only. You are duly warned not to use this article for individual investor advice and you should seek the advice of a market professional.