Tuesday, February 8, 2011

deja vu all over again

Haven't we seen this rodeo before? One week our illustrious Federal Reserve Bank Chairman talks his talk and gets the inflationistas all worked up, and the next week one of his regional chiefs talks tough about inflation. This week it is the Dallas Fed chairman telling the world that he will vote against any further Quantitative Easing. The markets didn't even hesitate.

The news is uniformly bad about housing. But some of the housing stocks are in solid uptrends. Not all, but a couple anyway. The housing stocks telegraphed the slump in housing when they topped back in July of '05, at least two years before the housing market tanked. The bottom for Lennar was in Nov. '08. The stock has been forming a large "head and shoulders" bottom, the inverse of the topping pattern years earlier. If LEN trades above about 22 it may be a good long term hold. Here is the chart.

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