Homebuilders have been on fire for the last year, and Lennar (LEN - Get Report) is a perfect case in point: shares of the $8 billion company have doubled in the last 12 months. So the question now is whether there's still room for a profit in LEN -- and sources point to "yes."
Lennar spent most of the final quarter of 2012 forming a bullish ascending triangle pattern, a price setup that's formed by a horizontal resistance level above shares and uptrending support below them. As shares bounce in between those two price levels, they're getting squeezed closer and closer to a breakout above resistance; when it happens, we've got a buy signal. For Lennar, that happened as soon as the calendar flipped over to 2013.Since then, shares have consolidated sideways, throwing back to test newfound support just below $40. Yesterday's push above Lennar's throwback high is basically a secondary buy signal for shares. Yes, you miss out on a couple of points by entering here, but the probability of more upside is magnified by the buying pressure that just got verified at $40. I'd recommend keeping a protective stop at the 50-day moving average if you decide to jump in here. Lenna was also featured recently in " 5 Stocks Set to Soar on Bullish Earnings."