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The Fibocall: D.R. Horton

I'm seeing a long-term oversold signal, but wait for the stock to close above this key level.
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When you wake up on a Monday morning and see the futures gapping higher, what do you do? I get a big cup of coffee and look back at some recent long-term signals to see if the stocks are ready for a trade.

That's nearly the case with D.R. Horton (DHI), as the stock generated a long-term oversold signal on Aug. 8.

We're waiting on this one, however. That's because, in order for us to own the stock, it needs to close above $21.22, or the 0.236 retracement level of the decline between the July 2 high and the Aug. 7 low -- $25.23 to $19.99.

D.R. Horton (DHI) -- Daily

Source: StockCharts.com

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Long-term signals from D.R. Horton have provided us with some great entry and exit points in the past. For instance:

  • The February long-term overbought signal saw the stock fall 16%.
  • The March long-term oversold signal saw D.R. Horton rally more than 20%.
  • The July long-term overbought signal gave way to a share retreat of more than 20%.

At this point, D.R. Hortonhas generated a new long-term oversold signal -- and, again, the buy signal will come when shares close above $21.22. After such a finish, look for these ensuing bounce levels:

  • 0.382 retracement at $21.99
  • 50% retracement at $22.61
  • 0.618 retracement at $23.22

D.R. Horton also has some key daily moving averages to clear -- the 200-day at $22.01, the 100-day at $22.68 and the 50-day at $22.90.

At the time of publication, Berman had no positions in the stocks mentioned.