For his first "Executive Decision" segment of Mad Money Friday night, Jim Cramer spoke with Sheryl Palmer, chairman and CEO of Taylor Morrison Home Corp. (TMHC) , the nation's fifth largest homebuilder. Taylor Morrison just closed on its $2.4 billion acquisition of William Lyons Homes.
Palmer said it's a great time to be a home builder with interest rates are low and the consumer confident. She said the acquisition of William Lyon gives the company access to new markets.
Let's check out the charts and indicators of this homebuilder.
In the daily bar chart of TMHC, below, we can see that prices have been challenging the October highs. Prices are above the rising 50-day moving average line and above the rising 200-day moving average line.
Since making a low in November the On-Balance-Volume (OBV) line has moved up sharply to make a new high. This a strong message that buyers of TMHC have been more aggressive than sellers in recent weeks.
The Moving Average Convergence Divergence (MACD) oscillator turned bullish in early January when it moved above the zero line. Recently the oscillator has crossed to the downside generating a take profits sell signal.
In the weekly bar chart of TMHC, below, we can see that this rally is the third time prices have been up around the $28 area. Will this be the time when prices breakout to the upside?
With a rising OBV line that is close to a new high, anything can happen. The MACD oscillator just turned to the upside above the zero line giving us an outright go long signal.
In this first Point and Figure chart of TMHC, below, we used daily price data to construct the chart. Here, a nearby price target of $28.13 is being shown. This would be a new high for the move up on this chart and would refresh the uptrend.
In this second Point and Figure chart of TMHC, below, we used weekly price data to project a a price target of $39.
Bottom-line strategy: Overall the charts and indicators of TMHC are positive. Prices could "chop around" a bit further but the odds favor an upside breakout to new highs. Trade from the long side risking below $24 and looking for gains to the $40 area longer-term.