Last Monday I wrote about Lennar (LEN) in Using Seasonal Analysis to Improve Trade Odds. Since then, LEN has fallen slightly below the bottom of the up-trending channel I identified in that article, and the volume pattern of the past few weeks shows more selling than buying. But fundamentally, homebuilders are one of the stronger sectors right now.
Unless LEN rebounds strongly from current prices, it may be best to just watch the stock for a while, and not try to take advantage of LEN's strong seasonal pattern starting in a few weeks. Seasonal Analysis, like most other techniques, works best when you apply experience and personal judgment to the situation. Right now, LEN dropping below its well-formed trendline doesn't eliminate the chance of a good rally in the stock, but it does lower the odds of success.
But in today's Seasonal Forecaster newsletter I identify a trade setup on a stock that has been producing good gains from rebounds off the up-trend line and stochastics oversold levels:
Fundamentally, the company is steamrolling. It has an EPS growth rate of 97%, an Investor's Business Daily Composite Rating of 98, and a Relative Strength of 93. Look at the revenue growth:
As with my seasonal analysis of LEN, this stock also has a good track record of gains through the end of the year. Over the next 16 weeks, this stock has averaged a 14.4% gain, with only 3 losses in the past 23 years. Many of the gains were double-digit.
In today's newsletter I cover not only the conditions necessary for buying this stock, but an alternate long call trade that could return 42% by the end of October, and a Covered Call trade that could return a quick gain that would work out to a 94% annualized return.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, please click on the following link: www.markettamer.com/seasonal
Copyright (C) 2015 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com.
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