Toll Brothers Continues to Build on Prior Gains

 | May 18, 2017 | 2:20 PM EDT
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Toll Brothers (TOL) continues to build on its prior gains as prices inch higher and higher. We discussed our technical view on TOL in April where we positive on the stock and suggested to buy any dip.

Looking at the price action since then we find that was a good strategy. TOL has since tallied further gains to a new high on its move up. Despite the recent developments in lumber imports and mortgage rates, TOL is still pointed higher on the charts.

In this updated daily bar chart of TOL, below, we can see that prices are still above the rising 50-day moving average line. The 200-day moving average line also has a positive slope. The daily On-Balance-Volume (OBV) line has been rising the past 12 months and tells us that buyers of TOL have been more aggressive, which tends to be bullish for stocks. The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since mid-November and is still in a bullish mode.

In this weekly chart of TOL, below, we can see that prices are firmly above the rising 40-week moving average line. The weekly OBV line has been rising since early 2016 and tells us that there has been considerable buying/accumulation of shares. The MACD oscillator on this weekly timeframe has been bullish since January and is still positive.

In this Point and Figure chart of TOL, below, we can see that a trade at $38.23 will be a fresh upside breakout. The current price target is around $41. This does not sound like a big move but it does mean that prices break above their 2015 highs and that could precipitate further gains.

Bottom line: continue to hold longs on TOL and raise sell stop protection to a close below $35.

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