We dodged the bullet by holding back on shorting this vehicle and the shares of some other homebuilders. I had second thoughts a couple of weeks ago after seeing a news item that said builders were planning to ramp up construction this summer. Go figure! Whether the planned new homes get sold is open to speculation; but for now, the “story,” if not the actuality, is bullish for the sector. No one seems to have noticed that 30-year mortgages have pushed above 4%, but oh well.
Beazer’s daily chart went bullishly impulsive last week (see inset), and on Friday the stock pushed past a 20.84 rally target. This means we must shift to a pattern of larger degree to come up with a new target. Using the weekly chart, I suggest looking at this one: a=12.89 on 11/16/12; b= 25.34 on 1/32/14. (Note: I am using lower-case coordinates here because, in the very big picture, the two-and-a-half-year uptrend shown is merely corrective against a much larger downtrend.) Notice that BZH last week exceeded the 20.43 midpoint pivot of the pattern by 68 cents — enough for us to presume that more upside to p2=23.54 is likely, or possibly even to d=26.65. Such an outcome is still speculative, and it may in fact be advantageous for us to attempt shorting this vehicle somewhere shy of the highest number. For now, though, the stock is a buy on any pullback — most immediately via a ‘mechanical’ bid at p=20.43, stop 19.40. The usual rules apply. For a detailed explanation, pivoteers should check out the latest Wednesday tutorial recording. ______ UPDATE (11:36 p.m. EDT): Am I imagining it, or did the reversal from yesterday’s peak following Beazer’s brief swim against the tide seem like more than a merely mechanical effort to get back in synch with the stock market? With global markets plummeting on the news about Greece, it at least seems plausible that bulls caught a whiff of economic uncertainty pungent enough to cast doubt on the homebuilders’ recently announced plans to ramp up construction this summer. If true, eager as we’d been to short a phat top in this stock, we seem to have missed an opportunity.