On Mad Money Monday night , one "Lightning Round" caller asked Jim Cramer about the homebuilder Lennar (LEN) : "I think Lennar is a good company." Let's check and see if LEN is also a good stock.
In this daily bar chart of LEN, below, we can see that prices made a peak in October. Prices are now trading below the declining 50-day moving average line but still above the slightly rising 200-day moving average line.
The trading volume has been diminishing since the middle of September and the On-Balance-Volume (OBV) line shows a decline from early October suggesting a shift from aggressive buying to aggressive selling.
The Moving Average Convergence Divergence (MACD) oscillator went to a sell signal in late October.
In this weekly Japanese candlestick chart of LEN, below, we can see a bearish candlestick pattern in early October. Prices have weakened but still remain above the rising 40-week moving average line.
The weekly OBV line shows strength the past two years and even made a new high for the move up in November.
The MACD oscillator crossed to the downside in October for a take profits sell signal.
In this daily Point and Figure chart of LEN, below, we can see a potential downside price target in the $65 area.
Bottom line strategy: We always need to balance the short-term outlook and risks with the longer-term trend. For LEN that means a potential risk to the $65 area but with chart support in the $65-$57 area from May-July, this could be a longer-term opportunity to buy.
