· LEN – fell below its 13-month uptrend line in March as the market cratered.
Now, LEN has rallied 101% in the past 6 weeks and has arrived back at the March breakpoint, which should be resistance (zoom chart).
The March decline pushed the 50DMA below the 200DMA (long term downtrend confirmation). Chart 3 shows that when the 50DMA crossed above the 200DMA in 2017 and 2019, LEN rallied an additional 48%+ both times, but when the 50DMA fell below the 200DMA in 2018, LEN fell an additional 30%.
Finally, although the average 30 Year Mortgage has fallen to 3-year lows (chart 4), which normally would increase demand for housing and be good for homebuilders, but the availability of mortgage credit has fallen hard below its 7-year uptrend line (chart 5), which portends a poor environment for new home buying.