PHM

[Melf Elf]

nullz,

Cramer must have bought the selloff, after he said "take some."   

"Short sellers on Toll Brothers (TOL - news - Cramer's Take - Rating), KB Home (KBH - news - Cramer's Take - Rating) and Pulte Homes (PHM - news - Cramer's Take - Rating) "are all about to get rolled over if they stay short," Cramer said. 

"The homebuilders are ready to come back," he said. "Homebuilders are sitting at their lows because things aren't getting worse."

"It's time to ride the bull and for shorts in the homebuilding sector to declare victory" and not be piggish bears, Cramer said."

You're in nice shape here, nullz, as long as the 32.76 high of the Right Shoulder doesn't get taken out to the upside.

The close was a few pennies above the neckline, so that held on a closing basis.  If 32.76 gets taken out to the upside, watch out for a Cramer short squeeze. 

Good luck!

[nullzero]

I covered today with about a 9% profit. May reshort PHM if it gets into the 33s again. Enter a long position in DIVX.

[Melf Elf]

I covered today with about a 9% profit.

nullz,

Congratulations!  You worked very hard on this trade.  Applause.

I had to laugh when I saw the long-tailed Bullish Hammer close above the neckline again , by a couple of pennies.  I'm not one for conspiracy theories, but it would seem that "they" dost conspire to take this higher.

"They" being defined as "Cramer." 

Just kidding.   

May reshort PHM if it gets into the 33s again.

You might give that some more thought.

If PHM hangs on here, and if the high of the Right Shoulder, 32.76, gets taken out to the upsdie, it could be a Bull Trap, and you'd be fine shorting it.  But, ESLR, at April earnings, is the ONLY example that I can think of in recent memory where the takeout of a Right Shoulder was a Bull Trap.

The rest of them resulted in at least short-term short squeezes (like Boatman's NGA), and some of them got quite nasty, particularly NTRI, GIGM, SWIR and most recently, NVEC.

I've been meaning to discuss "The Takeout of Right Shoulders" in Melf's Workshop.  Haven't gotten around to it.

Anyway, nice trade, nullz! 

[nullzero]

PHM is looking nice to reshort again soon.

[Melf Elf]

PHM is looking nice to reshort again soon.

nullz,

There's a TRIPLE Short Squeeze on in PHM, so be careful about shorting it.

Short Squeeze #1: The "mini" Bearish H&S Top (in red).  It looked like that pattern was going to fail right at the neckline (blue) of the Blue H&S Toip.

Instead, that "bearish" pattern broke out to the UPSIDE yesterday, so the pattern measurement is IN PLAY on the UPSIDE.

Short Squeeze #2: The Breakout of the BULLISH Inverse H&S (Green Trendline).  The Blue Right Shoulder of the Blue Bearish H&S is the Left Shouder....the Right Shoulder is in the pattern in red.  (Sorry, that's complicated to see that on the chart).

Short Squeeze #3: I've had that on this chart for quite awhile.  That's the takeout of the Right Shoulder of the Blue H&S Top.

When those get taken out to the UPSIDE, it can presage a horrific short squeeze, like we saw in NVEC, GIGM, NTRI,

Yesterday's white candle in PHM was on 6 milliion shares, and was very tough on the shorts.  PHM gave back a little today, but not much, and it's now rallying, squeezing the shorts again.

PHM currently is BID 34.07...ASK 34.08,  up $0.34, and printing new highs on the day.

[nullzero]

I am watching it to see if it over extends itself to the upside, if it starts showing weakness soon it may be a good short after existing shorts get squeezed out. The stock shouldnt have much upside left... the stock is trading up but the fundamentals and housing situation gets worse.

[Melf Elf]

I am watching it to see if it over extends itself to the upside, if it starts showing weakness soon it may be a good short after existing shorts get squeezed out. The stock shouldnt have much upside left... the stock is trading up but the fundamentals and housing situation gets worse.

Nullz,

Yeah, you might want to hang about a bit, and let it play it.  CNBC is going to do a piece in a minute about how bad the housing market is, but "What's up with the rally in the housing stocks?"

"What's up" is a nasty short squeeze.

PHM currently is BID 34.07...ASK 34.08, up $0.34, and printing new highs on the day.

Now at 34.51.  The bears have been under constant pressure the past two days on the squeeze.

[nullzero]

just shorted PHM again at 34.23

[Melf Elf]

There's a TRIPLE Short Squeeze on in PHM, so be careful about shorting it.

Short Squeeze #1: The "mini" Bearish H&S Top (in red).  It looked like that pattern was going to fail right at the neckline (blue) of the Blue H&S Toip.

Instead, that "bearish" pattern broke out to the UPSIDE yesterday, so the pattern measurement is IN PLAY on the UPSIDE.

Short Squeeze #2: The Breakout of the BULLISH Inverse H&S (Green Trendline).  The Blue Right Shoulder of the Blue Bearish H&S is the Left Shouder....the Right Shoulder is in the pattern in red.  (Sorry, that's complicated to see that on the chart).

Short Squeeze #3: I've had that on this chart for quite awhile.  That's the takeout of the Right Shoulder of the Blue H&S Top.

nullz,

Be careful, buddy.  The TRIPLE Short Squeeze still is on.  PHM has taken out last Friday's high in today's down market, and is marching higher on the squeeze.

[nullzero]

Im under 2% right now but im pretty confident the market is not thinking clearly on this one. PHM should be trading low 30s soon once reality sets back in, im going to hold through the squeeze.

[Melf Elf]

Im under 2% right now but im pretty confident the market is not thinking clearly on this one. PHM should be trading low 30s soon once reality sets back in, im going to hold through the squeeze.

nullz,

Okay, just wanted to make sure that you understood the TRIPLE short squeeze.  Good luck!

UPDATE 1-RESEARCH ALERT-Time right to buy into homebuilders-Citi

Wed Dec 6, 2006 12:45PM

Dec 6 (Reuters) - Citigroup recommended that investors buy shares of homebuilders now as order trends are expected to turn positive in the first quarter of 2007.

"While many wait for an improvement in fundamental data such as prices or inventory to signal an 'entry point' in the stocks, we urge investors to look back to prior cycles, when the group rallied far ahead of fundamentals," Citigroup analyst Stephen Kim said in a research note.

The brokerage firm raised its price targets on the following companies: COMPANY NAME PRICE TARGET

Current Prior
Pulte Homes Inc (PHM.N: Quote, Profile , Research) $45 $39
D.R.Horton Inc. (DHI.N: Quote, Profile , Research) $48 $39
Lennar Corp. (LEN.N: Quote, Profile , Research) $88 $68
Centex Corp. (CTX.N: Quote, Profile , Research) $83 $68
Toll Brothers Inc. (TOL.N: Quote, Profile , Research) $42 $36
KB Home (KBH.N: Quote, Profile , Research) $92 $75
MDC Holdings Inc. (MDC.N: Quote, Profile , Research) $85 $63
Ryland Group Inc. (RYL.N: Quote, Profile , Research) $95 $66
Beazer Homes USA Inc. (BZH.N: Quote, Profile , Research) $80 $57
Hovnanian Enterprises Inc. (HOV.N: Quote, Profile , Research) $63 $48
Standard Pacific Corp. (SPF.N: Quote, Profile , Research) $43 $32
Meritage Homes Corp. (MTH.N: Quote, Profile , Research) $87 $66
Technical Olympic USA Inc. (TOA.N: Quote, Profile , Research) $18 $17

(Reporting by Deepti Chaudhary, Aditya Phatak in Bangalore)
© Reuters 2006. All Rights Reserved.

[nullzero]

PHM is pulling back, I think we are going to see 30-31 next week.

[Melf Elf]

Bought PHM at 31.94.  Stop: 31.54.  Risk: a loss of 1.3%.

This morning's 31.55 low was an exact hit to the Inverse H&S neckline that broke out on November 30.  (see daily chart, next post).  PHM now has gone green on the day by a few cents.

If 31.55 wasn't a low, I'll stop it out. 

[Melf Elf]

The neckline of the Inverse H&S (green line) that broke out on November 30 came in today at 31.554.  This morning's low: 31.55.

The pattern (in blue) off the December 6 high of 35.31 (Blue #1) is a Falling Wedge, a bullish continuation pattern if the top of it (Blue #1 and Blue #3) is taken out to the upside.  This morning's 31.55 low "should be" Data Point #4 of that pattern.

The 50/200DMAs will make a Bullish Cross on any decent rally.

Seems worth a risk of 1.3% on the trade on a stop out at 31.54.

[Melf Elf]

I like the fact that PHM managed a positive close in a down market, especially given the fact that two hours after I bought it, CNBC did a piece in which they said that analysts expect the stock to be one of the WORST performers in the S&P in 2007.

You have to love that kind of thing, right after you bought the stock! 

At any rate:

1. Yesterday's low of 33.55, which was an exact hit to the Inverse H&S neckline (in green),  held up as the low on the day.

2. The 33.55 simultaneously provides Data Point #4 (in blue) for a Bullish Falling Wedge if it continues to hold up, which "should be" a bullish continuation pattern.

3. The 50 DMA is at 31.895 and rising; the 200 DMA is at 32.12, and falling.  They'll make a Bullish Cross on any decent rally.

4. Friday's high of 32.12 was right at the 200DMA. It would be a plus if PHM can knock that out, and close above it.

5. A takeout of the top of the Bullish Falling Wedge would be a THIRD Bullish pattern breakout in a Rising Channel (see Ichimoku Kinko Hyo chart, next post).

6. Always excluding a gap down, of course, I like the fact that the risk is only a 1.3% loss in this trade, which is a buy at what "should be" support.  That remains to be seen.