Toll Brothers Inc. (TOL) has rallied from its October low but most of the technical indicators are now pointing to renewed price weakness in the weeks ahead. Let's take a walk through of the charts and indicators on this stock discussed by Jim Cramer on Mad Money Friday night.
In the daily bar chart of TOL, below, we can see how prices firmed the past three to four months, lifting prices to retest a former support area around $38 that has now become resistance -- buyers on the way to $38 are now sellers on the way back up. Prices are trading on top of the 50-day and 200-day moving averages and a close below $35 would put prices below the averages but a close above $38 would be needed to strengthen the picture.
The daily On-Balance-Volume (OBV) line has been in a downtrend from August and tells me that sellers have been more aggressive even with the recent rally in price.
The Moving Average Convergence Divergence (MACD) oscillator has been in a take profits mode since January and this indicator is close to crossing below the zero line for an outright sell signal.
In the weekly bar chart of TOL, below, we see that prices made a shallow rally within the context of a longer decline from January 2018. Prices are above the 40-week moving average line but the line has a negative slope. The weekly OBV line has inched up the past five months but it is a long way below its best levels.
The weekly MACD oscillator has started to narrow right at the zero line so we are probably not going to see a bullish cross of the zero line.
In this Point and Figure chart of TOL, below, we can see a downside price target of $32.68. This is not a big decline in price but it does put the bear back in control.
Bottom-line strategy: Housing is a key industry but it looks like TOL is not going to add much to economic growth in the weeks ahead.