Watch Earnings From Beazer, D.R. Horton to Gauge Strength in Housing
Homebuilders Beazer Homes (BZH) - Get Report and D.R. Horton (DHI) - Get Report report results for the quarter that ended in September 2015 before the opening bell Tuesday. The year-to-date performances for the two are in opposite directions.
Beazer Homes missed earnings estimates in January and in August, but beat in April, which coincides with the stocks trading lower into early February. The year-to-date high was in June and the year-to-date low in October. Analysts expect the company to earn 92 cents a share.
D.R. Horton beat earnings for three consecutive quarters. That streak is reflected in the performance of the stock, which held its 200-day simple moving average in mid-January and set higher highs until the 2015 high set in mid-September. The stock has been above the 200-day throughout this trend. Analysts expect the company to earn 62 cents a share.
Here's the daily chart for Beazer.
Courtesy of MetaStock Xenith
The daily chart shows that Beazer had a close of $14.18 on Friday, up 6.4% so far in the fourth quarter, but down 26.8% year to date. The stock is in bear market territory -- 33.1% below its June 29 high of $21.19.
Since this stock has had both up and down volatility, today's analysis will be based on the Fibonacci Retracements from the June 29 high to the Oct. 2 low of $12.95.
On a positive reaction to earnings, Beazer should pop above its 23.6% retracement of $14.89, targeting the 38.2% retracement of $16.09. On a negative reaction, the risk is to a new low.
Here's the weekly chart for Beazer.
Courtesy of MetaStock Xenith
The weekly chart for Beazer is neutral, with the stock below its key weekly moving average of $15.07 and its 200-week simple moving average of $17.68. The weekly momentum reading rose to 25.45 last week, up from 24.00 on Oct. 30. Momentum scales from 00.00 to 100.00, with a reading below 20.00 oversold and a reading above 80.00 overbought. A rising reading above 20.0 is positive while a declining reading below 80.00 is negative. This study is shown in red along the bottom of the chart.
Investors looking to buy Beazer should place a good till canceled limit order to buy the stock if its drops to $8.99, which is a key level on technical charts until the end of 2015.
Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $16.56 and $18.88, which are key levels on technical charts until the end of November and the end of 2015, respectively.
Here's the daily chart for D.R. Horton.
Courtesy of MetaStock Xenith
The daily chart shows that D.R. Horton had a close of $29.40 on Friday, up just 0.1% so far in the fourth quarter and up 16.3% year to date. The stock is in correction territory, 11.1% below its July 17 high of $33.06
This stock benefited from a "golden cross" set on Dec. 2, 2014, when the 50-day simple moving average moved above the 200-day simple moving average when the stock closed at $25.37.
Investors trading this signal could have bought the stock on Jan. 16, when the 200-day was tested at $22.88. This would be the last time the 200-day would be tested as the stock rallied to a high of $33.06 on Sept. 17.
The key level to hold on a negative reaction to earnings is the 200-day at $28.09. The key level on a positive reaction is the 50-day simple moving average of $30.41.
Here's the weekly chart for D.R. Horton.
Courtesy of MetaStock Xenith
The weekly chart for D.R. Horton is negative, with the stock below its key weekly moving average of $30.04, but well above its 200-week simple moving average of $22.26. The weekly momentum reading declined to 54.20 last week, down from 59.67 on Oct. 30.
Investors looking to buy D.R. Horton should place a good till canceled limit order to buy the stock if it drops to $27.38, which is a key level on technical charts until the end of November.
A key level of $29.50 should act as a magnet in November.
Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to $31.44, which is a key level on technical charts until the end of 2015.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.