Nearly every month we get more positive news about the national housing market -- starts, sales, inventory and so forth -- but so far it hasn't translated into a big rally for Lennar (LEN). Frankly, the housing market and the stocks in the industry have not been the same since that Jun. 13, 2005 cover story on Time.
Remember it? A classic.
In this daily chart of LEN, above, we can see that prices have had a downward drift since August. There was a two and a half month recovery from a February low, but LEN has not built on those gains.
LEN has crisscrossed above and below the 50-day and 200-day moving averages. Currently, the trend of these averages is flat or neutral. The biggest negative on this daily chart is the On-Balance-Volume (OBV) line, which has been pointed down over the past 12 months -- and especially since April. A declining OBV line happens when the volume of shares traded is heavier on days when LEN closes lower.
In this weekly chart of LEN, above, we can see that LEN is currently below the declining, 40-week moving average line. LEN has traded intra-week above the average line, but hasn't closed above it. The OBV line on this weekly timeframe is neutral with a slight downward bias. The 12-week momentum study is neutral.
LEN could continue to trade sideways, but a close below $43 should tip the scales downward. It may take a lot more than a close above $50 to embolden the bulls, however, as there is a lot of chart resistance in the $50 to $55 zone.