• Chart of the Day – Reader Request Edition: Hovnanian Enterprises (HOV)

    by  • February 6, 2013 12:41 pm • Quick Hits, Tony Venosa's Chart of the Day • 0 Comments

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    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 87th 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.


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    Tony Venosa, CMT is a Senior Options Strategist and works on the trading desk at Schaeffer’s Investment Research. He joined Schaeffer’s in 2010. He has worked in the finance industry for over 15 years. He began his career as a trading assistant in Chicago on the floor of the Chicago Mercantile Exchange. He later moved upstairs and worked as a commodities broker on both the retail and hedging side. He left the brokerage industry to begin his trading career as a proprietary equities trader at a Chicago firm. In 2000, Tony moved backed to his hometown and continued trading his personal account. He later went on to earn his Chartered Market Technician designation. He earned a B.S. in Finance from Miami University. Tony’s main focus is short-term directional option trading.


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