Toll Brothers (TOL) built an 11-month base pattern. Prices have strengthened in recent weeks in what appears to be the start of a more sustained advance. Let's visit with our charts and indicators to see what sort of neighborhood we're headed to.
In this one-year daily chart of TOL, above, we can see a sideways trading range since January. Overall the price action is sideways, but there is a pattern of higher lows in February, June and early November. There was an upside breakout in late August and early September, but the gains did not last. Prices have broken out to yet another new high this month and these gains look more solid.
The 50- and 200-day simple moving average lines both are pointed upward with positive slopes. A small dip in November retested the 200-day average line and another dip in early December was a retest of the 50-day average. The On-Balance-Volume (OBV) line turned up in late June and has made new highs for the move up this month, confirming the price strength with aggressive buying. The Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since mid-November, but the two averages that make up the oscillator are poised to cross to a liquidate-longs sell signal.
In this three-year weekly chart of TOL, above, we can see that prices are above the rising 40-week simple moving average line. With the rally above $30, the $30 to $26 area now should act as support. While the weekly OBV line is not rising strongly, it at least has a positive tilt. The weekly MACD oscillator recently crossed above the zero line for an outright go long signal.
Bottom line: TOL looks to be in the best technical shape it has been in some time. I would trade TOL from the long side risking below $28. A rally into the $36 to $38 area is possible in the first half of 2017.