D.R. Horton (DHI) reached our $50 price target we outlined back in August, saying that," If you are long DHI continue to hold. Raise stop loss protection to a close below $33. I will settle for the round number of $50." Prices topped in January and have tumbled from $53 to $40. DHI is down and nearby support is not visible on the chart until around the $37-$35 area. Let's review the latest charts and indicators to decide on the best course from here.
In this daily bar chart of DHI, below, we can see how prices broke lower this week. DHI broke below the rising 200-day moving average line and below the early March and early April lows. The 50-day average line looks like it will close below the 200-day line soon for a bearish dead cross. The On-Balance-Volume (OBV) line was rising from September but looks like it has been weakening the past week. A declining OBV line suggests that sellers of DHI have been more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator has turned down at the zero line for a fresh sell signal.
In this weekly bar chart of DHI, below, we can see that prices are below the cresting 40-week moving average line. The weekly OBV line has been in a decline all year and the MACD oscillator is poised to cross below the zero line for an outright sell signal on this time frame.
In this Point and Figure chart of DHI, below, we can see a bearish downside price target of $34.
Bottom line: DHI might be considered oversold and there could be a short-term bounce, but the big picture suggests further declines to the $34 area possible in the weeks ahead.