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Home Building Stocks and Interest Rates to Watch This Week
June 24 2019 - D.R. Horton, LGI Homes Lead 5 Top Stocks Worth Watching Amid Rate Cut Hopes By Investors Business Daily
KB Home (KBH), Lennar (LEN), D.R. Horton (DHI), NVR (NVR) and LGI Homes (LGIH) lead five top stocks to watch this week, as Fed hints at a future rate cut. Meanwhile, a still-robust economy is boosting both homebuilder stocks and a young stock market uptrend.
Both KB Home stock and Lennar stock have slipped below their 50-day averages ahead of their respective earnings this coming week. D.R. Horton stock is setting up in a flat base above the 50-day line, with NVR stock and LGI Homes stock also trading above the 50-day.
Top Stocks With Bullish Chart Action
D.R. Horton's shallow base means it was able to hold up relatively well during the recent stock market correction. That marks bullish chart action, making it worthy of your investing watchlist.
LGI Homes leads the group with an IBD Composite Rating of 96 out of 99. That means this builder of affordable new homes is outpacing 96% of all stocks in key fundamental and technical metrics, such as earnings and sales growth.
NVR follows with a 93 while KBH stock, Lennar stock and D.R. Horton stock have good-not-great CRs in the 80s.
D.R. Horton Stock
The Texas-based homebuilder rallied this year through late April. D.R. Horton stock has since formed a flat base largely above the 50-day line, with a potential 47.12 buy point. Shares are 5% below that pivot.
The relative strength line has moved higher this year, moving sideways since D.R. Horton stock hit a 2019 high in late April. The RS line is the blue line in the chart below, tracking performance against the S&P 500.
D.R. Horton targets more diversified offerings and geographical markets relative to peers. That could help it fare better if housing sales slow, analysts say.
NVR stock has seen its RS line rise markedly this year after lagging for most of 2018.
Homebuilder stocks are sensitive to interest rates. They were the top market group in 2017, nearly doubling in value, but were laggards last year as mortgage rates climbed along with Treasury yields.
LGI Homes Stock
The relative strength line for LGI Homes stock continues to look bullish, as the stock trades above the 50-day.
KB Home Stock
KB Home dropped further below its 50-day line in Friday. Raymond James said this week KB Home and Lennar may have run out of room to run, as new data shows single-family home construction stayed mediocre in May.
The RS line for KBH stock gradually outperformed the broad market from late 2018 but has faded somewhat since mid-May.
KB Home earnings are due Wednesday.
Lennar fell back below the 50-day line Friday. Its RS line has been going sideways for the past four months. Lennar earnings are early Tuesday.
For exposure to the entire homebuilders sectors, investors can tap the SPDR S&P Homebuilders ETF (XHB) or the leveraged play Direxion Daily Homebuilders Bull 3X (NAIL).
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