During last Friday's "Mad Money" program Jim Cramer said he's a fan of buying the home builders. He recommended Lennar Corp. (LEN) , which is up 55.5% for the year to date. Let's look in our toolbox of charts and indicators to see how far the rally in LEN can extend.
In this daily bar chart of LEN, below, we can see the uptrend that Cramer referred to as prices have climbed higher from late December and with another rally from late July. Prices are bullishly aligned above the rising 50-day moving average line and the bullish 200-day moving average line.
The On-Balance-Volume (OBV) line shows an irregular uptrend the past 12 months and it is very close to making a new high for the move up. A rising OBV line tells us that buyers of LEN have acted more aggressive than sellers, with heavier volume transacted on days when LEN has closed higher. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line but temporarily in a take profits sell mode.
In this weekly bar chart of LEN we can see a bullish chart. LEN is in a long-term uptrend with prices above the rising 40-week moving average line. The weekly OBV line is bullish and has stalled just short of its early 2018 zenith. A rise to a new high soon will probably foreshadow prices making new all-time highs. The weekly MACD oscillator is clearly in a bullish configuration.
In this weekly close only Point and Figure chart of LEN, below, we can see an upside breakout at $53.62 and a potential longer-term price target of $91.
Bottom line strategy: LEN could trade sideways for a few days or even a few weeks. Use that sideways action to buy. Risk a close below $55 and set the $70-$75 area as your first price target with $90 possible after that.
