Homebuilder Lennar (LEN) has been trading higher the past year, as the demand for new homes has been soaring from coast to coast. We looked at the charts of LEN back on March 10 ahead of earnings and wrote that it seemed like Lennar, like other homebuilders, "can't build them fast enough."
"I don't know what Lennar's quarterly numbers will be, but the charts are pointed higher and the Point and Figure chart suggests a $118 price target. Risk to $75."
LEN has not reached our $118 target yet, but things are still headed in the right direction. Let's look at some updated charts.
In this daily bar chart of LEN, below, we can see that prices pulled back this month, but remain in an upward trend and well above our suggested $75 stop. LEN is trading below the rising 50-day moving average line, but it looks like prices will soon trade back above the line.
The slower-to-react 200-day line has a positive slope and intersects around $85. The On-Balance-Volume (OBV) line lost some ground in April, but appears to be steadier this month. The Moving Average Convergence Divergence (MACD) oscillator is below the zero-line but poised to cross to the upside for a cover shorts buy signal.
In this weekly Japanese candlestick chart of LEN, below, we can see that prices are in a longer-term advance. We see a bearish engulfing pattern in early May, but there has been little follow-through selling. LEN is above the rising 40-week moving average line. The weekly OBV line has been moving upward since early 2019 and confirms the price advance. The MACD oscillator has just crossed to the downside for a take-profit sell signal.
In this daily Point and Figure chart of LEN, below, we can see that the software is reading the X's and O's and forecasting a possible downside price target in the $83 area. A trade at $101.37 will probably improve the picture.
In this weekly close only five box reversal Point and Figure chart of LEN, below, we can see a longer-term target of $288.
Bottom line strategy: Continue to hold longs from March 10. Raise stop protection to $90 from $75.
