Prudently Prune Homebuilders

01/19/06 - 03:13 PM EST

Richard Suttmeier

Since all of these stocks appear range-bound, I will ignore their weekly chart profiles, as this measure works best in trending markets.

Centex (CTX Quote - Cramer on CTX - Stock Picks) is trading right around its fair value. Investors should wait to add to positions on weakness to my semiannual value level at $69.86 and reduce positions on strength to my quarterly pivot at $78.22.

KB Home (KBH Quote - Cramer on KBH - Stock Picks) is trading 3.6% below its fair value. Investors should wait to add to positions on weakness to my semiannual value level at $66.51 and reduce positions on strength to my monthly risky level at $88.23.

Lennar (LEN Quote - Cramer on LEN - Stock Picks) is trading 11.8% below its fair value. Investors should wait to add to positions on weakness to my annual value level at $57.35 and reduce positions on strength to my semiannual risky at $73.24.

Pulte Homes (PHM Quote - Cramer on PHM - Stock Picks) is trading 12.7% below its fair value. Investors should wait to add to positions on weakness to my semiannual value level at $37.26 and reduce positions on strength to my quarterly risky level at $49.90.

Ryland Group (RYL Quote - Cramer on RYL - Stock Picks) is trading 7.2% below its fair value. Investors should wait to add to positions on weakness to my annual value level at $70.16 and reduce positions on strength to my semiannual risky level at $99.48.

Toll Brothers (TOL Quote - Cramer on TOL - Stock Picks) is trading 10.9% below its fair value. Investors should wait to add to positions on weakness to my annual value level at $29.99 and reduce positions on strength to my quarterly risky level at $49.40.

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Richard Suttmeier is president of Global Market Consultants, Ltd., chief market strategist for Joseph Stevens & Co., a full service brokerage firm located in Lower Manhattan, and the author of TheStreet.com Technology Report newsletter. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. Early in his career, Suttmeier became the first U.S. Treasury bond trader at Bache. He later began the government bond division at L. F. Rothschild. Suttmeier went on to form Global Market Consultants as an independent third-party research provider, producing reports covering the technicals of the U.S. capital markets. He also has been U.S. Treasury strategist for Smith Barney and chief financial strategist for William R. Hough. Suttmeier holds a bachelor's degree from the Georgia Institute of Technology and a master's degree from Polytechnic University. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback -- click here to send him an email.
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