Despite High Mortgage Rates, Hovnanian Could Surprise on the Upside
Let's take a tour of the homebuilder's charts and indicators.
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Hovnanian Enterprises, Inc. HOV is a large homebuilder that operates in at least 12 states according to the company's website. My wife and I were driving around near our home in Delaware and wound up stopping at a grand opening of one of their new communities in Georgetown, Delaware.
We have looked at a number of Hovnanian projects over the years and were pleasantly surprised by the two decorated models that we toured.
Let's check out the charts and indicators of HOV.
In the daily bar chart of HOV, below, I can see a six-month sideways consolidation pattern. The shares traded sideways since December on active trading volume.
The On-Balance-Volume (OBV) line has moved lower but shows us twin lows in April and May. Prices trade between the 50-day and the 200-day moving average lines. The Moving Average Convergence Divergence (MACD) oscillator has been correcting lower but is still above the zero line.
In this weekly Japanese candlestick chart of HOV, below, I see a mostly positive picture. The shares trade above the rising 40-week moving average line.
The weekly OBV line shows us a rising trend over the past two years. The MACD oscillator is pointed down but is close to a bullish crossover. The most recent weekly candle could be part of a bottom reversal pattern. A bullish candle this week is needed to complete the reversal.
In this daily Point and Figure chart of HOV, below, I can see an upside price target in the $161 area.
In this weekly Point and Figure chart of HOV, below, I can see that the software is projecting an upside price target in the $300 area.
Bottom-line strategy: the HOV development we visited on Saturday had a lot of traffic, which is a good sign. This was only a very small sample of a large corporation but it tells me that this company knows how to sell houses in this current market environment.
Traders could go long HOV at current levels risking to $120 or below the 200-day moving average line.
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