NEW YORK (TheStreet) -- Homebuilder stocks have been trading lower since the end of February, when the PHLX Housing Sector Index (HGX, now at 194.21) set a 52-week intraday high at 213.81 on Feb. 26. On March 19, I asked "Is It Time to Sell Homebuilder Stocks?"
The answer was a clear yes. All 19 housing-related stocks in the housing index are lower today than on at the closes on March 18. So is Beazer Homes (BZH), which is not the index.
So is now the time to buy?
We conduct a technical analysis to find that out. The first 12 stocks in today's "Crunching the Numbers" tables are homebuilders, the other eight provide supporting products and services for the housing market.
We'll discuss the market now, then present our technical analysis of housing market stocks in the charts on page 3 of this article.
The National Association on Home Builders Housing Market Index for April was released on April 15, and builder confidence for single-family homes rose a point to 47 up from a downwardly revised 46 in March, still below the neutral 50 reading.
Despite a three-month holding pattern for the market for new homes, the NAHB expects sales activity to improve over the months ahead. They cite job growth, historically low mortgage rates and affordable prices.
I question that optimism. Home prices and mortgage rates have been on the rise, even though most jobs being created are not at incomes conducive to affording a new home. The NAHB remains concerned about ongoing tight credit conditions and the limited availability of lots and labor.
The NAHB tracks their housing index vs. single-family starts. That came in at an annual rate of 635,000 in March, up from 583,000 in February, but still well below the potential of 1 million to 1.2 million unit range. The 60% recovery continues.
Here are the profiles for the homebuilders who report quarter results next week.
Note that KB Home (KBH) reported their quarterly results on March 19 and beat analysts' earnings per share estimates by a penny, earning 9 cents a share. The next day, March 20, Lennar (LEN) reported that they beat analysts' EPS estimates by 7 cents, earning 35 cents a share. All 20 stocks are covered in the tables that follow on page 3.
DR Horton (DHI) ($21.86, down 2.6% since March 18): Analysts expect the homebuilder to report earnings per share of 34 cents before the opening bell on April 24, with the stock between its 200-day simple moving average at $20.63 and its 50-day SMA at $22.74. The weekly chart is negative, with its five-week modified moving average at $22.11. A semiannual and weekly value levels are $21.42 and $21.34, with monthly and semiannual risky levels at $22.07 and $22.46.
M/I Homes (MHO) ($22.34, down 4.5% since March 18): Analysts expect the homebuilder to report earnings per share of 19 cents before the opening bell on April 24, with the stock just above its 200-day SMA at $22.04. The weekly chart is neutral, with its five-week MMA at $22.94 and with its stochastic trying to rise. A weekly value level is $21.89, with semiannual and monthly risky levels at $23.43 and $23.53.
Meritage Homes (MTH) ($42.30, down 2.8% since March 18): Analysts expect the homebuilder to report earnings per share of 64 cents before the opening bell on April 23, with the stock below its 200-day SMA at $43.86. The weekly chart is negative, with its five-week MMA at $43.56. Weekly and semiannual value levels are $40.88 and $40.30, with weekly and semiannual risky levels at $43.71 and $46.19.
PulteGroup (PHM) ($18.90, down 3% since March 18): Analysts expect the homebuilder to report earnings per share of 21 cents before the opening bell on April 24, with the stock just above its 200-day SMA at $18.21. The weekly chart is negative, with its five-week MMA at $19.27. Semiannual value levels are $16.30 and $15.16, with weekly and monthly risky levels at $19.06 and $20.78.
Ryland Group (RYL) ($38.66, down 6.6% since March 18): Analysts expect the homebuilder to report earnings per share of 46 cents before the opening bell on April 24, with the stock below its 200-day SMA at $40.18. The weekly chart is negative, with its five-week MMA at $40.51. Semiannual and monthly value levels are $36.78 and $36.51, with weekly and annual risky levels at $45.80 and $47.92.
Our technical analysis charts follow on page 3.
Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics
This table provides the technical status for the stocks profiled in today's report.
There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.
The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.
Interpretations: Stocks below a moving average are listed in red.
Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.
A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.
A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.
A stock with a neutral technical rating has a profile that is not positive or negative.
The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three to five year horizon. (Even Apple declined to its 200-week SMA in June 2013.)
The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.
The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.
The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six to 12 month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)
When should you buy and sell these stocks? We address that in our chart on page 4.
Crunching the Numbers with Richard Suttmeier: Earnings and Where to Buy & Where to Sell
This table presents the EPS estimates including date and before or after the close, and where to buy on weakness and where to sell on strength.
EPS Date is the day the company reports their quarterly results.
EPS Estimate is the earnings per share estimate from Wall Street analysts.
Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.
Note: Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff