NEW YORK (TheStreet) -- Homebuilder stocks set trading range lows in mid-October. After gains of 23% to 35% into the week of Thanksgiving, housing data show the market for new single-family homes appears to have stalled at 60% of potential. Continue to trade the ranges in homebuilder stocks. Here's the backdrop.
Within an uneven environment DR Horton (DHI) reported quarterly results on Dec. 16 and beat analysts estimates by one cent with earnings of 28 cents per share. Even with an earnings beat the stock declined to a test but held its 50-day simple moving average at $23.34 on Dec. 16.
Must Read: 12 Stocks Warren Buffett Loves in 2014
Earlier in the month, Toll Brothers (TOL) reported quarterly results on Dec. 10 and missed analysts estimates by a penny with earnings of 71 cents per share. The stock traded to the high end of its trading range at $35.46 then plunged to as low as $30.81 into Dec.16 before rebounding towards its 50-day simple moving average at $32.72 on Thursday.
Clearly, strength into the end of November was an opportunity to book gains on shares purchased at the low end of the trading ranges in October. Before updating the trading ranges for six homebuilders, let's look at the graph that shows how the market for new single-family homes continues to stall at 60% of potential.
The National Association of Home Builders Housing Market Index (in blue above with scale on the left) dipped a point to 57 in December, still above the neutral reading of 50. The NAHB gave this survey a positive spin continuing to expect single-family home construction to rise in 2015.