ONE-TWENTY TWO: Trading Financial Markets
Exploring the poetry in financial markets for students of money and economy since the year 2000.
Overall Assessment I want to be bullish on Century Communities (CCS). Century Communities sports a recession-level valuation and a strong top-line growth profile. The company’s business model is solidly planted in the entry-level and lower-priced homes that are prime drivers of the current housing market. However, a negative cash balance, negative earnings growth (over the … Read more
The Timing and the Stock Charts During the analyst conference call explaining the deal to buy William Lyon Homes (WLH), CEO Sheryl Palmer revealed that Taylor Morrison Home Company (TMHC) began buy-out talks several months ago. That was a time of rising optimism for home builders. The announcement of the deal came shortly after investors … Read more
AT40 = 57.4% of stocks are trading above their respective 40-day moving averages (DMAs)AT200 = 54.9% of stocks are trading above their respective 200DMAsVIX = 12.1Short-term Trading Call: neutral Stock Market Commentary The stock market seems to be on a slow and steady march toward Christmas. The current bearish divergence and an exceptionally low volatility … Read more
This is a moment of truth for the stocks of homebuilders. The iShares Dow Jones Home Construction ETF (ITB) last week hit a 21-month high that exactly coincided with a climactic high in January, 2018. The subsequent selling this week seemed to unfold like clockwork. The selling was particularly notable given the S&P 500 (SPY) … Read more
Overall Assessment I am neutral on Pulte Homes (PHM). The company’s Q3 2019 earnings report was good but not spectacular. I am warily eyeing year-over-year net income and earnings per share declines even as the company experiences robust demand and buys back shares. Most importantly, with a 2.0 price/book ratio, PHM is relatively expensive compared … Read more