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The Oxen Group is a financial analysis and investment opportunities newsletter-based website run by financial analyst David Ristau and features several other traders. Ristau and team have been working in stocks for several years and has developed a knack for identifying winning short-term and... More
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Marketfy - Option Spread Portfolio
  • KB Homes Ready for Nosedive 0 comments
    Jul 27, 2009 4:46 AM | about stocks: SRS, KBH, LEN

    The Oxen Group is definitely concerned for this week compared to the past two weeks. All the major indices are vastly overbought technically and some worrisome sectors are reporting this week, leading into the GDP announcement that will most likely have investors fearing and selling off. To start the week, however, we may see a major to minor pullback in the housing industry that has been one of the major movers over the past two weeks. On Monday, the industry will get another major piece of data in new home sales, which is released at 9:00 AM. This barometer of how many new homes were sold in June could help the housing industry but only temporarily. If new home sales are somewhat weak tomorrow, the market's bottom. One stock that is extremely overvalued is KB Homes (NYSE:KBH). KB Homes has seen a 33% gain in the last two weeks. It has moved outside its upper bollinger band, it is way overvalued on RSI, and overbought. If home sales don't meet expectations, KBH will definitely be sold off and it will trend lower from the start that investors can make a nice 2-4% gain on a short sell. If estimates meet or beat expectations, then the housing industry should definitely move up in the morning, but with how toppy the housing market and KB Homes is, it should move down from an intraday peak even if the housing report is bullish. Futures for the market are bullish, but that is most likely due to Asia's bullishness. American orders and stocks were not having the same amount of success.

    Entry: Recommend buying in early if the home report is weak, 45 minutes if report is good.

    Exit: We recommend exiting after a 2-4% increase.

    Stop Loss: We recommend a 3% stop loss on all buy in prices

    Upper Resistance: (lower) 15.00

    Themes: housing, home Stocks: SRS, KBH, LEN
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