During Friday's Mad Money program host Jim Cramer told viewers that we will have earnings from Toll Brothers (TOL) after the close of trading Monday. Cramer noted that housing has been a major bright spot in the economy.
Let's check out the charts of this upscale home builder.
In the daily bar chart of TOL, below, we can see that the shares bottomed in March with the turnaround in the broader market. Prices rallied into October and turned sideways. TOL has crossed above and below the 50-day moving average line for several weeks. The slope of the slower-to-react 200-day moving average line is neutral or flat.
Trading volume has declined since late August as prices have been chopping sideways. The On-Balance-Volume (OBV) line has made higher lows from September to November and the line is close to making a new high for the move up. This indicator can lead prices and right now it is telling us that TOL can rally to new highs.
The Moving Average Convergence Divergence (MACD) oscillator is just slightly above the zero line in a bullish alignment.
In the weekly bar chart of TOL, below, we can see a mostly positive-looking picture. Prices have been in an uptrend since March and poised for further gains with a strong and leading OBV line. The 40-week moving average line is neutral but should turn positive as prices rally into year-end.
The MACD oscillator could turn up or down as the two moving averages are right on top of each other.
In this daily Point and Figure chart of TOL, below, we can see that a trade at $49.03 should refresh the uptrend and a trade at $50.51 will be a more important breakout. An upside price target of $55.42 is being projected.
In this weekly bar chart of TOL, below, we can see an upside price target of $63.
Bottom-line strategy: While I have no special knowledge of the earnings figures for TOL, the charts and indicators suggest the stock will resume its uptrend. Aggressive traders who understand that nothing is 100% could go long TOL ahead of earnings. Risk to $41. Less aggressive traders should wait and buy strength.