Pulte Homes (PHM) Ready for a Breakout

05/06/2009 12:01 am EST

Focus: STOCKS

This US homebuilder and financial services stock fell from more than $48 a share in 2005 to under $7 in November.


But the lows in October, November, and March form a bullish triple bottom, and new buy signals from our internal indicator, the Collins-Bollinger Reversal (CBR), plus a new signal from the Moving Average Convergence/Divergence (MACD) indicator could be telling us that a major breakout from a long-term base is about to occur.

Recently, Pulte Homes (PHM) agreed to acquire rival Centex (CTX). Standard & Poor’s said of the deal, “Should this merger pass both regulatory and shareholder approval, the combined company would become the nation’s largest homebuilder…and with $3.4 billion in cash, we think the combined company would be well positioned to weather the housing downturn.”

The trading target is $16 to $18. Both PHM and CTX reported first quarter earnings results yesterday (5/5/2009).

By Sam Collins of OptionsZone.com

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