Home Building Stocks
If you've read my post from a few days ago, you would know that I am looking to short the homebuilders.
Above is a chart of the homebuilding index (HGX) and below that is the S&P500. You can see the obvious bearish divergence. Even over the last 3 days there is divergence. The S&P pushed up to a new high while the HGX index has not broken high and is making a lower high.
After hours PHM reported earnings and is pretty much unchanged from the 4:00 close. BZH will report earning tomorrow morning before the open.
Tomorrow if HGX can take out today's low I will begin to short some of these stocks.. If Tuesday's low is taken out, I will short more.
Here is PHM's earnings:
PHM Pulte Homes reports Q1; guides Q2 EPS below consensus
Reports Q1 (Mar) loss of $0.33 per share, incl lan chages, may not be comparable to the Reuters Estimates consensus of ($0.10); revenues fell 36.8% year/year to $1.87 bln vs the $1.81 bln consensus. PHM says they are not in a position at this time to provide guidance for the remainder of 2007. Co issues downside guidance for Q2, sees EPS of $-0.10-0.00 vs. $0.08 consensus. Q1 Closings were 5,420 Homes, a Decline of 37%; Average Sales Price Per Home Decreased 2% to $330,000 "Due to the lack of earnings visibility, difficult market conditions that exist today and uncertainty regarding possible land-related charges going forward, we are not in a position at this time to provide guidance for the remainder of 2007."
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6 comments:
Any particular stocks in your list to short? And when you say, 226.5 is taken out, you will short some and more when 225 is taken out, I take it intraday and not necessarily at close? Also,when you say "short more" you mean more stocks or more of the same?
I'm watching these stocks: CTX, BZH, HOV, KBH, LEN, PHM, RYL, SPF, TOL...etc
I'm looking to short weakness intraday. When I said I will short more if Tuesday's low is taken out, I meant I will get a little bigger in some of the stocks I already have short.
What do you think about shorting the ETF - XHB?
Excellent idea
Kevin, do you short stocks by put options? Never shorted before wanted to ask how one could go ahead with it with a basic low-cost trading account? Thanks!
You can get short by buying puts or selling calls or shorting the actually stock. I'll most likely short the stock.
If you are going to use options, you need to know if the option premiums are expensive or cheap. If the premiums are cheap, you are better off buying puts, if the premiums are expensive you would be better off selling calls.
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