The homebuilder stocks have lead the markets lower since August 2005 when they all seemed to peak. Since that time the world has experienced a global housing bubble and still feels the aftershocks from that collapse. Many economists are now saying that the homebuilders have bottomed and now is the time to be involved with these stocks. While this may or may not be true the fact remains that the homebuilder stocks still remain off the low in 2008. However, while many of these leading homebuilder stocks are above the 2008 lows many of them are not far from that low. These stocks also face many headwinds such as high unemployment, high foreclosures, and massive inventory. Lets look at the short term picture in some of the leading homebuilder stocks.

Toll Brothers Inc (NYSE:TOL) is a leading homebuilder that builds the high end luxury home. This daily chart still remains very weak. The stock has recently bounced off the $16.00 level which is good support. However, yesterday the stock made an outside day down which is a short term bearish pattern. This morning the stock is trading lower by 0.17 cents to $17.10. Should the stock decline sharply the $16.00 level will still be near term support. If Toll Brothers Inc somehow climbs higher the stock will have strong daily chart resistance around the $19.00 area.

Lennar Corp (NYSE:LEN) is another leading homebuilder stock that is trading slightly lower this morning trading down 0.19 cents to $14.83. This stock topped out in April at $21.79 and had has sold off sharply with the major stock indexes from that time. Yesterday the stock also made a sharp reversal bar on the charts which is short term bearish. The stock will have good support around the $13.00 level. Should the stock reverse and trade higher the $16.00 – $16.25 levels will be strong resistance.

D.R. Horton Inc (NYSE:DHI) is another leading homebuilder stock that is actually looking better than the rest on the daily chart. This stock has really just paused or consolidated over the past two trading sessions. D.R. Horton Inc has bounced sharply from early July with the rest of the major stock indexes. This stock will have daily chart resistance around the $11.85 – $12.00 area.

The homebuilder stocks remain off the recent lows and have traded higher with the major stock indexes. Many of these leading stocks reversed sharply lower yesterday and often these short term moves could lead to further downside. However, as long as the major market indexes hold up this downside could be limited.

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Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com