Meritage Homes (MTH) has been in a long sideways trend, but in recent months it looks like buyers have become more aggressive and we are seeing higher lows. What we would want to see is a higher high. A breakout over $41 would be a welcomed event for the bulls.
Let's check the charts.
In this daily bar chart of MTH, above, we can see the higher lows from November to February to March and April/May. Prices have made higher highs but have become stalled in late April and May to date. Prices are above the rising 50-day moving average line and the flat 200-day line. The daily On-Balance-Volume (OBV) line improved in November, December and January but it has been "flattish" since. The Moving Average Convergence Divergence (MACD) oscillator is positive.
In this weekly chart of MTH, above, we can see prices are above the flat 40-week moving average line. The weekly OBV line has been improving the past few months and the weekly MACD oscillator is bullish.
In this Point and Figure chart of MTH, above, a trade at $42 will be a breakout and allow us to use $48 as an upside price target.
Bottom line: MTH looks ready to break out and move higher. Aggressive traders could go long MTH on strength above $41 and above $42. Risk a close below $38.