Will Homebuilders Q4 Support Additional Share Price Strength?
NEW YORK ( TheStreet) -- The housing market has been a bright spot for the U.S. economy over the past several quarters. This week we will learn whether or not Q4 earnings from four homebuilders are strong enough to support additional share price strength.
Pre-market this morning Dow component Caterpillar (CAT) ($95.58) reported that they earned $1.04 per share after an 87 cents a share charge against improper accounting relative to operations of a new unit in China. CAT thus beat the $1.68 EPS estimate.
CAT is well below its February 2012 high at $116.95 and is well above its July 2012 low at $78.25. The daily chart shows an overbought condition and the weekly chart is positive with the five-week modified moving average at $92.06. The stock has a buy rating with a quarterly value level at $92.77 with an annual pivot at $96.43 (tested pre-market) and annual risky level at $97.63 which was tested last week.
My benchmark for the homebuilder industry is the PHLX Housing Sector Index (HGX). The weekly chart for HGX (191.35) shows an overbought condition with the five-week MMA at 177.24. HGX is up 11.7% year to date and up 159.8% since its October 2011 low. The horizontal red lines shown on the chart are called Fibonacci retracement levels of the decline from the July 2005 high to the March 2009 low. The 38.2% retracement is support at 145.52 with the 61.8% retracement a resistance at 202.09. HGX is above the 50% retracement at 173.81.Chart Courtesy of Thomson/Reuters At www.ValuEngine.com we show that 61.7% of all stocks are overvalued, and as I explained Friday in
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV