I’m not a housing bull.
I’ve been bearish on the sector since 2008.
I still don’t believe there’s a recovery because one wouldn’t make sense without exemplary employment growth and wage growth. Recent earnings and margin pressures at KB Home and Lennar aren’t encouraging either.
Pretending these realities don’t exist won’t make things better.
But even I have to agree, the latest sell off in builders, like KBH was overkill, setting it up for a quick, near term dead cat bounce from oversold technical reads. If we examine just MACD and RSI here, we can see that every time these levels overbought conditions surface, this stock – no matter how severe the news – has a tendency to reverse for a bit.
And that’s what I’m looking to profit from very quickly. I want to get in and out of the trade in days, bearish on housing or not.
Consider buying to open KBH calls. There are two ways to trade this opportunity.
One, consider buying the KBH March 2015 121 call up to $1.
And, or two, consider buying to open the April 2015 12 call up to $1.35.
Hold all other existing trades. I’ll talk to you again shortly.
My apologies for having to change the webinar time last week… I broke my wrist and finger, falling on the ice and found myself in the hospital for longer than hoped.
I did not open or close any trades last week, given wild volatility and my wrist.
Take good care,
Ian L. Cooper
Forgotten Profits