Lennox, Masco, Providers of Building Materials Outperform Homebuilders

NEW YORK (TheStreet) - Armstrong World (AWI), Lennox International (LII), Masco (MAS), Owens Corning (OC) and Vulcan Materials (OC) are five components in the PHLX Housing Index, which contains 19 companies; 11 homebuilders and eight companies that provide products and services supporting the housing market.

The housing index has a year-to-date gain of 8.5% beating the S&P 500, which has a gain of 3.3%. Housing's outperformance narrowed from a 10% gain, while  the S&P 500 was up just 0.4% on April 6.

Let's look at the weekly chart for the housing index:


Courtesy of MetaStock Xenith

The weekly graph for the housing index focuses on the Fibonacci Retracement levels of the popped housing bubble, which saw this index decline 82% from 293.66 in July 2005, to a low of 54.31 in March 2009. The housing index has been above its 61.8% retracement, at 202.05, since July 2014, with a multiyear intraday high of 238.32 set on April 6. The 200-week simple moving average at 170.74 is the longer-term uptrend for this index.

Here are the year-to-date performance measures for the companies that support housing.

Armstrong World had a close of $57.25 on Tuesday, up 12% year to date vs. 11% on April 6. The designer of floors, ceilings and cabinets has a neutral weekly chart with the stock above its key weekly moving average of $56.38, but with declining weekly momentum.

Investors looking to buy Armstrong should place a good-till-canceled limit order to purchase the stock if it drops to $53.69, which is a key level on technical charts until the end of June.

Investors looking to reduce holdinsg should place a good-till-canceled limit order to sell the stock if it rises to $59.25, which is a key level on technical charts until the end of June.

Lennox International had a close of $114.10 on Tuesday, up 20% year to date vs. 18% on April 6. The air conditioning and heating company has a positive weekly chart with the stock above its key weekly moving average of $110.28.

Investors looking to buy Lennox should place a good-till-canceled limit order to purchase the stock if it drops to $90.61, which is a key level on technical charts until the end of June.

Investors looking to book profits should place a good-till-canceled limit order to sell the stock if it rises to $114.43, which is a key level on technical charts until the end of June. This key level was tested as the stock set an all-time intraday high of $115.21 on Tuesday.

Masco had a close of $27.77 on Tuesday, up 10% year to date vs. 5.6% on April 6. The home improvement and building-products company has a positive weekly chart with the stock above its key weekly moving average at $26.72.

Investors looking to buy Masco should place a good-till-canceled limit order to purchase the stock if it drops to $25.32, which is a key level on technical charts until the end of June.

Investors looking to book profits should place a good-till-canceled limit order to sell the stock if it rises to $28.68, which is a key level on technical charts until the end of June. The stock set an all-time intraday high of $27.93 on Tuesday.

Owens Corning had a close of $41.19 on Tuesday, up 15% year to date vs. a gain of 20% on April 6. The provider of insulation, roofing and siding has a neutral weekly chart with the stock above its key weekly moving average of $40.85, but with declining weekly momentum.

Investors looking to buy Owens should place a good-till-canceled limit order to purchase the stock if it drops to $37.41, which is a key level on technical charts until the end of June. This level was tested on May 6.

Investors looking to reduce holdings should place a good-till-canceled limit order to sell the stock if it rises to $46.12, which is a key level on technical charts until the end of June.

Vulcan Materials had a close of $92.34 on Tuesday, up 40% year to date vs. 28% on April 6. The concrete and cement company has a positive chart but is overbought, with the stock above its key weekly moving average of $87.44.

Investors looking to buy Vulcan should place a good-till-canceled limit order to purchase the stock if it drops to $78.17, which is a key level on technical charts until the end of June.

Investors looking to book profits should consider employing a sell stop on a weekly close below the five-week modified moving average of $87.44, which will be rising each week.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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