Homebuilder Lennar Still Looks Bullish Ahead of Earnings

The charts and indicators suggest higher prices in the weeks ahead.

During Friday's Mad Money program, Jim Cramer gave his game plan for this week. It begins today with Q3 earnings from homebuilder Lennar (LEN) after the close. 

We last reviewed the charts of LEN on July 9 and wrote that "The charts and indicators of LEN are bullish and with the charts of other home builders strong, I feel good in recommending the long side of LEN at current levels and above $66. Risk a close below $60 and target the $79 area on the upside."

Let's check on the charts and indicators again. 

In this daily bar chart of LEN, below, we can see that prices continued to rally after our July review and reached our $79 target area by late August. Prices pulled back to successfully retest the rising 50-day moving average line. The 200-day moving average line remains bullish with a positive slope.

The On-Balance-Volume (OBV) line has been steady since early July.

The Moving Average Convergence Divergence (MACD) oscillator made a lower high in August versus June even though prices made a higher high. This is a bearish divergence but it may not affect prices all that much.  

 

In this weekly bar chart of LEN, below, we see a bullish picture. Prices are in an uptrend and above the rising 40-week moving average line.

 

The weekly OBV line has been moving higher since late 2018 and only shows a shallow dip in August.

 

The MACD oscillator is at a new high with prices unlike the daily MACD time frame. The MACD oscillator has narrowed a little in recent weeks but a bearish signal appears to be a ways off at this juncture. 

 

 

 

In this daily Point and Figure chart of LEN, below, we can see a potential downside price target around $69.  

 

 

In this weekly close only Point and Figure chart of LEN, below, we can see a potential upside price target in the $121 area. 

 

 

Bottom line strategy: The charts and indicators of LEN look bullish ahead of earnings tonight. I have no special knowledge of the numbers but the charts and indicators suggest higher prices in the weeks ahead. Longs should risk a close below $70 now.

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