Spring is here, and homebuyers are on the prowl…as are homeowners who are weeding, planting and otherwise beautifying their properties. I’m seeing two stocks in different areas of the housing sector making opposite moves on my Trending123 Pattern Scan powered by Recognia, and I thought I’d pass along the signals to you at 24/7 Trader.
Buy the Upside Breakout
Click to EnlargeLennar Corp. (LEN) is a homebuilder stock that has developed an upside breakout over the past 76 days, making this an intermediate-term trade that should play out over the next six weeks to nine months.
The price is just starting to break upward out of a trading range suggesting we’re entering a new uptrend. In this pattern, you’ll notice a trading range in which prices move sideways between two parallel horizontal lines. It’s often a pause or congestion area within an existing trend, though sometimes the breakout results in a reversal to the prior trend. Either way, an upside breakout through the upper resistance line signals an end to the consolidation period and the start of an uptrend.
Recommendation: Buy LEN for a $49.75 – $51.25 target
Short the Bearish Continuation Wedge
Click to EnlargeScott’s Miracle-Gro (SMG) is a company that provides lawn care products. Its stock has developed a bearish continuation wedge over the past 20 days—making an intermediate-term trade, but one that’s more likely to play out sooner than later.
After a temporary interruption, the prior downtrend is set to continue. A Continuation Wedge pattern represents a temporary interruption to a downtrend, taking the shape of two converging trendlines both slanted upward against the trend. During this time the bulls attempt to win over the bears, but in the end the bears triumph as the break below the lower trendline signals a continuation of the prior downtrend.
Recommendation: Short SMG for a $41.75 – $43.00 target
InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open, Parabolic Options and Trending123. Trending123 members receive access to the Trending123 Pattern Scan powered by Recognia free as part of their membership. For more information on which service is for you click here.