Home Building stocks have had quite the year as a low interest rate environment, coupled with reduced inventory, has kept demand high for newly built homes. The resilient job market has also brought new buyers to the market. Many Home Builders were in strong uptrends until last month's report of an October slowdown in new home sales, which caused a sharp pullback in many stocks in this group.
Given that the positive economic dynamics remain strong for this group, we've seen a steady recovery over the past 6 weeks, with today's strong new home sales results from Hovnanian (HOV) reminding investors that there's still plenty of room for growth.
Not all companies are poised to benefit equally from the perfect storm that's surrounding these stocks. Today's chart is all about one of the leading companies in this space, M I Homes (MHO), who reported stellar 3rd quarter growth in late October, causing a gap up in price on volume. The stock has since consolidated this big move up and appears poised for a breakout from a 5-week base.
DAILY CHART OF MI HOMES, INC. (MHO)
As you can see, the RSI is positive as is the MACD. A positive crossover of the black MACD line up through the red signal line, coupled with a breakout on volume, would be very positive for this stock.
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Warmly,
Mary Ellen McGonagle,
