Don't Put a Down Payment on Lennar Shares
Stock continues to weaken as Citigroup downgrades the homebuilder on 'softening housing activity'
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Shares of home builder Lennar Corporation LEN have weakened since early April and Tuesday morning Citigroup downgraded home builders LEN and D.R. Horton DHI on "softening housing activity."
Let's check out the potential downside price targets on the charts.
In this daily bar chart of LEN, below, I can see that prices have reached a precarious technical position. Prices are trading below the negatively sloped 50-day moving average line and just slightly above the rising 200-day moving average line. Trading volume increased in June as prices declined and that is a sign that traders are voting with their feet. The On-Balance-Volume (OBV) line has been rising since October which I find a bit strange. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero-line.
In this weekly Japanese candlestick chart of LEN, below, I see a vulnerable picture. Prices have weakened and are testing the rising 40-week moving average line. The weekly OBV line has been stalled the past 12 months and is currently pointed lower. The moving average convergence-divergence oscillator has been correcting lower since March and is headed down toward the zero-line.
In this daily Point and Figure chart of LEN, below, I can see a downside price target in the $131 area.
In this weekly Point and Figure chart of LEN, below, I can see a potential price target in the $127 area.
Bottom line strategy: Traders should not put down a "down payment" on shares of LEN as further declines seem likely in the weeks ahead.
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