PulteGroup Inc. (PHM) was reviewed in the middle of June where I wrote that "PHM has broken out on the upside and traders could go long here and on any shallow dip under $32 if available. Risk below $29 for now looking for gains to the $40 area."
Unfortunately that upside breakout on PHM quickly reversed and would have stopped you out with a manageable loss by the end of the month. Yes, investing is risky. Let's check out the charts again Monday afternoon to see if the decline in PHM has run its course on the stock discussed recently by our own Jim Cramer.
In the daily bar chart of PHM, below, we can see that this month that prices made new lows for the year. PHM is below the declining 50-day moving average line and the bearish 200-day line. The daily On-Balance-Volume (OBV) line is close to making a new low for the move down from its June peak.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has been bearish since late July and is still pointed down.
In the weekly bar chart of PHM, below, I see a mostly bearish picture. Prices are below the declining 40-week moving average line. There is some chart support probably around $24 and more around $22.
The weekly OBV line shows a peak in early December and no turn to the upside yet suggesting that sellers have been more aggressive all year. The weekly MACD oscillator has been in a sell mode since July.
In this Point and Figure chart of PHM, below, we can see that prices made a new low at $27 and there is a downside price target of $21.
Bottom-line strategy: PHM could be prone to a limited bounce to the upside at any time but the trend has been down since January and we have no base pattern established so at the end of the day we are likely to see further declines to the $21 area.