KB Home Led Housing Stocks Higher Despite Weak Single-Family Starts

NEW YORK (TheStreet) -- I have been tracking the 19 components of the PHLX Housing Sector Index plus Beazer Homes (BZH), which is not in this index. Today's update follows the National Association of Home Builders release of its latest housing market index on Monday and after the U.S. Census Bureau released the latest reading on housing starts on Tuesday.

Here's the rub on these important housing data releases: The NAHB releases its HMI for the current month before the Census Bureau releases housing starts and building permits for the prior month.

Homebuilder confidence rose four points in June to 49 just below the neutral reading of 50. Even so, the NAHB remain concerned about a limited availability of labor. I fact, builders are employing approximately 1.5 million fewer workers today than at the end of 2007.

Homebuilders say that prospective new home buyers remain hesitant waiting for clearer signals that there is a full-fledged economic recovery. Builders are thus reluctant to significantly add to new home inventories.

Housing starts for May fell 6.5% supporting these homebuilder concerns. The NAHB tracks single-family starts which fell 5.9% to an annual rate of 625,000 units down from 664,000 in April. This remains at roughly 60% of the normal 1 million to 1.2 million annual rate of production.

Here are the profiles. The "crunching the numbers" tables follows:

Beazer Homes ($19.51, up 4.6% since May 16) is trading back and forth around a semiannual pivot at $19.47 with a semiannual value level at $13.24 and weekly and quarterly risky levels at $19.94 and $21.17, respectively.

DR Horton (DHI) ($23.48, up 5.8% since May 16) has a tight semiannual value level at $23.01 with weekly and quarterly risky levels at $25.24 and $25.79, respectively.

Hovnanian (HOV) ($4.42, down 2.4% since May 16) is above its 200-week simple moving average at $3.94 with semiannual risky levels at $4.68 and $5.04.

KB Home (KBH) ($17.21, up 8% since May 16) has a semiannual value level at $13.79 with a weekly pivot at $16.86 and semiannual and monthly risky levels at $17.76 and $18.64, respectively.

Lennar (LEN) ($41.30, up 7.2% since May 16) is above its five-week modified moving average at $40.36 with weekly and semiannual risky levels at $42.24 and $44.34, respectively.

MDC Holdings (MDC) ($29.00, up 1.9% since May 16) is above its 50-day simple moving average at $28.41 with a semiannual pivot at $28.73 and weekly and monthly risky levels at $30.62 and $30.71, respectively.

M/I Homes (MHO) ($22.53, up 1.1% since May 16) is above its 200-week SMA at $17.25 with its 200-day SMA at $22.26, and weekly and semiannual risky levels at $24.12 and $25.87, respectively.

Meritage Homes (MTH) ($40.48, up 4% since May 16) has a weekly value level at $37.46 with monthly and semiannual risky levels at $41.57 and $44.69, respectively.

PulteGroup (PHM) ($19.62, up 4.1% since May 16) has a semiannual value level at $16.15 with weekly and semiannual risky levels at $19.95 and $20.51, respectively.

Ryland Group (RYL) ($37.63, up 0.5% since May 16) has a semiannual value level at $35.95 with weekly and monthly risky levels at $38.47 and $41.69, respectively.

Standard & Pacific (SPF) ($8.26, up 5.4% since May 16) is above its 21-day, 50-day and 200-day SMAs at $8.09, $8.04 and $8.16, respectively, with a semiannual pivot at $8.21 and monthly and semiannual risky levels at $9.01 and $9.74, respectively.

Toll Brothers (TOL) ($36.21, up 5.1% since May 16) is above its 200-day SMA at $34.76 with a semiannual value level at $35.71 and weekly and quarterly risky levels at $37.18 and $39.60, respectively.

Armstrong World (AWI) ($55.63, up 6.4% since May 16) - the designer of floors, ceilings and cabinets has a weekly value level at $49.90 with monthly and quarterly risky levels at $56.24 and $57.47, respectively.

Fidelity National Title Group (FNF) ($32.88, down 2% since May 16) - the title insurance company has a semiannual value level at $29.16 with semiannual and weekly risky levels at $34.13 and $35.33, respectively.

Lennox International (LII) ($89.15, up 6.3% since May 16) - the air conditioning and heating company has weekly and semiannual value levels at $83.72 and $82.23, respectively, and monthly and quarterly risky levels at $97.04 and $100.60, respectively.

Masco (MAS) ($21.72, up 4.2% since May 16) - the home improvement and building products company has weekly and semiannual value levels at $20.61 and $17.93, respectively, with monthly and semiannual risky levels at $23.00 and $23.43, respectively.

Owens Corning (OC) ($41.01, up 1.1% since May 16) - the provider of insulation, roofing and siding is above its 200-day SMA at $40.24 with a weekly pivot at $41.43 and semiannual risky levels at $42.97 and $44.31.

Radian Group (RDN) ($15.44, up 9.1% since May 16) - the provider of private mortgage insurance has monthly and semiannual value levels at $14.95 and $10.66, respectively, with a weekly pivot at $15.32 and quarterly risky level at $20.38.

Vulcan Materials (VMC) ($63.85, up 5.7% since May 16) - the concrete and cement company has weekly and semiannual value levels at $60.83 and $57.68, respectively, with annual and monthly risky levels at $68.52 and $72.50.

Weyerhaeuser (WY) ($30.93, up 2% since May 16) - the timber and forest products company has monthly and annual value levels at $30.51 and $23.41, respectively, and semiannual and weekly risky levels at $31.06 and $33.61, respectively.

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)

Crunching the Numbers with Richard Suttmeier: Earnings & Where to Buy & Where to Sell

This table presents the date the company reported EPS, the beat or miss of analysts estimates and the reported earnings per share, and where to buy on weakness and where to sell on strength.

EPS Date is the day the company reported their quarterly results.

Beat / Miss - in red is a miss, in black is a beat.

Retorted EPS is the earnings per share reported for the last quarter.

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.

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.

Follow @Suttmeier

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff

>>Citigroup Looks Like a Smart Hedge as Interest Rates Remain Low

Richard Suttmeier is the chief market strategist at ValuEngine.com.

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