Chart of the Day: Builders FirstSource May Just Have Put in a Bottom
Secondary indicators tell us this may the case.
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New portfolio addition Builders FirstSource BLDR has shown a modest decline to good support following a monster up move from those October lows. The the largest supplier of building products and fabricated components was probably benefiting from the dollars generated by the Infrastructure Law passed by the U.S. government in 2021. That unleashed billions of dollars to fix roads, bridges, highways, buildings and other structures — perfect for BLDR.
The stock moved up nearly 100% from November to April.
A recent decline has been painful for investors, but it appears to be just a garden variety correction. The surprising move down in early May (purple bar) was on pretty heavy turnover, a sign big institutions were selling at higher prices. Are they back in the game now? It's hard to determine, but certainly in June so far the stock is finding good support.
Stochastics are coming around, hence we are starting to see the momentum engine get going. This stock does not move like a wild tech name, it is much slower and grinds higher. Moving Average Convergence Divergence (MACD) is turning for a buy signal crossover. Price action has improved; the candles are now pink (cautiously bearish), rather than purple.
We like this name as a starter position and may be adding more when the opportunity is there.
We rate BLDR a One in TheStreet Pro Portfolio.
At the time of publication, TheStreet Pro Portfolio was long BLDR.
