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A Review Of Next Candle’s Top Stock Forecasts: Homebuilding Stocks Sink

|Includes:DHI, KB Home (KBH), PHM

On Friday morning, the Department of Commerce reported that new home sales fell 1.6% for February and this news naturally sent homebuilder stocks downward - the same direction that Next Candle's stock forecasts had predicted before the market opened. Specifically and on Thursday before the new housing sales numbers were released, Next Candle issued the following stock forecasts for these three well known homebuilding stocks:

  • KB Home (NYSE:KBH) had a 67% probability of making a lower low during the next trading day.
  • PulteGroup (NYSE:PHM) had a 77% probability of making a lower low during the next trading day.
  • D.R. Horton (NYSE:DHI) had a 71% probability of making a lower low during the next trading day.

And the results on Friday when the market closed:

  • KB Home (KBH) fell $0.95 or 8.45% to close at $10.29. KB Home (KBH), which was the first homebuilder stock to be listed on the New York Stock Exchange (NYSE), had a $9.55 to $11.10 trading range for the day and never rose above its Thursday's close. It's worth noting that on Friday, KB Home (KBH) missed earnings expectations for the quarter while cancellations rose from 29% for the same period last year to 36% for last quarter while orders for new homes fell 8% 1,197. KBH did report a smaller loss and is upbeat about a recovery but obviously the increase of properties available via foreclosures and short sales are still impacting the company along with other homebuilder stocks.
  • PulteGroup (PHM) fell $0.24 or 2.63% to close at $8.88. PulteGroup (PHM), which has operations in 60 markets and 28 states and whose brand portfolio includes well known brands such as Pulte Homes, Centex Homes and Del Webb, had a day's trading range of $8.33 to $9.01 for the day and never rose above its Thursday's closing price. Analysts say that PulteGroup (PHM) was hit by the poor results of KB Home (KBH).
  • D.R. Horton (DHI) rose $0.01 or 0.06% to close at $15.43. D.R. Horton (DHI), which calls itself the largest homebuilder in the US, had a day's trading range of $14.64 to $15.53 and spent most of the day below its Thursday's closing price. DHI did briefly rise above its Thursday closing price around noon and then very late in the day - perhaps because it has managed to remain profitable over the last two years.

Of course, how much of a profit you would have made from a good stock prediction tool about homebuilder stocks KB Home (KBH), PulteGroup (PHM) and D.R. Horton (DHI) on Friday would have depended upon your trading strategy and how well you were able to execute it. Nevertheless and at the very least, our stock forecasts for homebuilder stocks could have helped you decide between buying or holding a homebuilding stock and loosing money or perhaps avoiding the sector all together.

Stocks: KBH, PHM, DHI