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New York
Thursday, March 28, 2024

Re Building

Another scary start to the morning today. With options expiring tomorrow and the quarter coming to an end, anything can happen.

LEN beat expectations for the year and gave in-line guidance for next year (in line meaning growth of 15%). This should continue the run on home builders (we called the bottom just right on the 8th).

WLS is a nice play if you are patient, they dropped 33% in October over issues that had mainly to do with a temporary (9 month) misalignment of demand (high) vs. homes available (low). In essence, they were sold out… I like the stock at this level ($110) as a straight buy and hold through January earnings. A stop of $100 is unlikely to be tested and good earnings could easily put this stock back over $120.

Other builders I still like for additional movement into January’s earnings:
TOL – buy the stock ($37.97), sell the Jan $40 for $1.25 (3%)
DHI – Jan $35 for $3.90 ($1 premium)
PHM Jan $40s look nice for $3.95 (a $1.15 premium)
TOA is also in a good spot to make a move with Jun $20s priced at $2.50 (a $1.91 premium)

CVCO is straight up since the call on the 12th but I think it is only being held down by the 50 dma and will continue up from there.

Watch TOL closely for a lead on market direction an none of these trades are on if LEN doesn’t open up. The black cloud hanging over the industry is the strong possibility of an inverted yield curve which could cause panic.

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