The largest company in the residential construction sector hit new 2017 highs on Monday. D.R. Horton(DHI) - Get Report finished the session with a 1.4% gain on its heaviest trade in weeks. This impressive move drove shares past the March peak and may signal the end of a five week consolidation. Ahead of Thursday morning's earnings news DHI is setting up well for more upside.
DHI was unable to build any momentum following the election. The stock remained in a narrow range well below its 200-day moving average until a powerful earnings report-inspired breakout catapulted shares over 6.5%. DHI quickly faded after the earnings surge but after bottoming in early February has performed well. At last month's peak the stock was up over 25% from the January lows and had entered extremely overbought territory.
On Monday DHI ended an six-week bull pennant with an impressive upside resolution. The stock now has a very solid support zone in place and is set up well for more upside. Bullish investors should keep a close eye on the $33.90 to $33.00 area ahead of Thursday's report. This zone is marks a strong support area. On the upside, an important hurdle will be the the 2016 high near $34.55. A close back below $33.00 would indicate more consolidation is ahead before the first-quarter rally can resume.
At the time of publication, the author had no position in the stocks mentioned.