During Friday's Mad Money program, Jim Cramer looked ahead to this week. For Tuesday he noted that we'll get earnings from Lennar Corp. (LEN) , which will offer a read on housing. Let's check out the charts of LEN ahead of Tuesday's earnings report.
In this daily bar chart of LEN, below, we can note some interesting developments. Prices have been "chopping" sideways since April. LEN has crossed above and below the cresting 50-day moving average line.
The slower-to-react 200-day moving average line has been bottoming while the daily On-Balance-Volume (OBV) line has been weakening slightly from early May. A weakening On-Balance-Volume (OBV) line signals that sellers of LEN have become more aggressive.
The 12-day price momentum study in the lower panel shows weakening momentum peaks from January to June despite prices making higher highs until June. This is a bearish divergence and suggests that prices could stall or weaken in the weeks ahead.
In this weekly bar chart of LEN, below, we can see a former support area in the $55-$50 area in the first half of 2018 as prices declined from above $70 to below $40 has changed roles to a resistance area. Prices have stalled in the $50-$55 area with the 40-week moving average line flat.
The weekly OBV line is also flat or neutral the past two months while the Moving Average Convergence Divergence (MACD) oscillator has narrowed in recent weeks and could cross to a take profits sell signal in the weeks ahead.
In this Point and Figure chart of LEN, below, we can see a tentative downside price target of around $45.
Bottom line strategy: The charts of LEN look like they have weakened in the past two months. I would not look to be a buyer of LEN and would take steps to reduce your long exposure or to protect gains.
