Today’s chart comes courtesy from a number of reader requests for Hovnanian Enterprises (HOV) which designs, constructs, markets, and sells residential homes in the United States. It constructs single-family attached and detached homes, attached townhomes and condominiums, and urban infill and active adult homes.

Ticker:  Hovnanian Enterprises (HOV)

What I Am Looking At:

• iShares Dow Jones US Home Construction (ITB) etf has been outperforming, up nearly 9 percent year-to-date
• Shares of HOV have also been outperforming, up nearly 90 percent year-over-year
• A concern is the lack of performance on a year-to-date basis, down 23 percent
• First day of 2013 made a new 52-week high and has subsequently lost ground
• Another short-term concern is the recent breach of the 40-day moving average which has been significant on the most recent rally from August through January
• 2013 pullback has retraced 38.2% of the June low to the January high, possible long entry point
• Price is up 500 percent since its October 2011 bottom and short interest has grown 110 percent
• Short-covering could be a major factor for any longer-term plays
• Option buyers continue to be aggressive on the put-side as the 50-day buy-to-open put/call ratio ranks in the 87^th percentile of readings taken during the past year, an indication of pessimism
• Upgrade potential among the analyst community could provide possible tailwinds as 4 analysts rate the shares a “hold” and 2 have a “strong sell” rating
• Fundamentals look bright, as quarterly revenue growth (yoy) is 43 percent and quarterly earnings growth (yoy) is 34 percent
• Reports earnings on March 7th, unconfirmed

Conclusion:  HOV is a strong stock in a strong industry but has been weak on a short-term basis relative to some of its peers.  With sentiment still negative and a strong fundamental picture buying pullbacks for longer-term plays appears to be a solid move.