Regular readers of Kamich's Korner on Real Money know that I sometimes use the TheStreet.com's Quantitative Service for ideas on stocks to cover. Today I found that they upgraded Lennar (LEN) to "Buy". Let's check out the charts.
In this daily bar chart of LEN, below, we can see how prices were punished from February into March. Prices made a V-like bottom in March and a quick retest in early April. Prices have recovered quickly including a couple of upside price gaps.
The slope of the 50-day moving average line is now positive along with the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has zigzagged higher from the middle of March telling us that buyers of LEN have been mostly pushed higher by more aggressive buying.
The Moving Average Convergence Divergence (MACD) oscillator crossed the zero line in late April for a buy signal which still continues today.
In this weekly bar chart of LEN, below, we went back five years to show how prices broke several key lows in the $40-$35 area. Normally this kind of price break would have precipitated further declines but here the decline lasted just a few weeks.
Prices are now back above the rising 40-week moving average line. LEN is now in a position to retest the highs in the $70 area.
The weekly OBV line has been going up since December 2019. The MACD oscillator has crossed to a cover shorts buy signal.
In this Point and Figure chart of LEN, below, we can see that the software is projecting a potential upside price target in the $87 area.
Bottom line strategy: LEN is poised to trade higher in the weeks ahead. A shallow dip is likely to be a buying opportunity. Traders could go long with a stop below $56. The low $70's and the $87 area are our price targets.
