Registered User
Joined: 10/24/2005
Posts: 101
|
Presently I have a short on KBH and BMHC. Usually I cover my short whenever it look like it want to bounce, but I'm tired of watching the market too closely.
Right now, I'm thinking of maybe giving it a wider lattitude on the stop loss and letting run for a year or more. Kinda like a Long Term Sell Hold.
Long Term target on KBH is $40 and then $20. Today's price: $55.45
Long Term target BMHC is $20 and then $10. Today's price: $31.5
Please give me your thought or other ideas?
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
I agree with you that the long term trend for homebuilders is down.
But if you want to short, you have to watch closely. Otherwise, use puts.
I just doubled down on my HOV puts. I've had put spreads on HOV since it was in the low 50's.
Haven't made as much as I'd have liked, but I'm doing OK.
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
QUOTE (rmr1976) I agree with you that the long term trend for homebuilders is down.
But if you want to short, you have to watch closely. Otherwise, use puts.
I just doubled down on my HOV puts. I've had put spreads on HOV since it was in the low 50's.
Haven't made as much as I'd have liked, but I'm doing OK.
With your software you should have been doing better, IMHO
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
BK,
I don't use any Elliott Software. My analysis is my own, derived from about 5 years of observation of the markets.
HnC is the one who uses the Elliott Software. It seems to be working for him.
I agree with you though. My problem has been confusing exit strategies. Instead of taking profits at Fibonacci points on my counter-trend setups, I've been holding on too long.
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
QUOTE (rmr1976) BK,
I don't use any Elliott Software. My analysis is my own, derived from about 5 years of observation of the markets.
HnC is the one who uses the Elliott Software. It seems to be working for him.
I agree with you though. My problem has been confusing exit strategies. Instead of taking profits at Fibonacci points on my counter-trend setups, I've been holding on too long.
My appologies, from your earlier posts it seemed to me that you were using one. You seem to be doing a good job without one though.
|
|
Registered User
Joined: 11/8/2004
Posts: 8
|
jryanweb, just a reminder, many of the homebuilders pay nice dividends and that you are responsible for paying those dividends when holding them short.
|
|
 Gold Customer
Joined: 4/10/2006
Posts: 954
|
If your not already short there is not much hurry. May get a little correction in some of the home builders, esp if the fed starts to change their tone given the markets reaction to this last rate hike, and the fed comments. Might get a bounce.
TOL which is the high end builder...made a quick down after 7/2005..hardly looked back almost perfect symentry with the upside, others are following, but are in resistence areas. Bounce could provide some good entry points.
|
|
Gold Customer
Joined: 4/10/2006
Posts: 954
|
Has anyone checked home starts/ to see if they correlate with the descent in home builders?
TOL forward PE is 6. That is a lot of pessimism, probably warrented, but may be ahead of itself a bit here.
|
|
Gold Customer
Joined: 4/10/2006
Posts: 954
|
(external link removed by moderator)
|
|
Registered User
Joined: 10/24/2005
Posts: 101
|
Thanks everyone for your inputs.
In Southern California (Orange Cty), median prices have increased to a record level ($628,000), but volume is down -28% over last year.
When price goes up, but volume goes down, its not a good sign for housing.
|
|
Registered User
Joined: 10/7/2004
Posts: 2,126
|
Could you guys please define your long term. I think it may be confusing to some folks.
Long Term target on KBH is $40 and then $20. Today's price: $55.45
Long Term target BMHC is $20 and then $10. Today's price: $31.5
You know - there are a few support levels in between.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
Bigblock,
About defining long term: in my view, the trend for the builders is down for the next 18-24 months at least.
And you are right--lots of support in between. I'm sure there will be some points in the future where people are sucked into these stocks due to the low P/E.
The P/E on these stocks is low for a reason--they are great when the cycle is up, but when it is down, they are cash burners, and are likely to have negative earnings and cash flow. They all have land and options on the balance sheet that will have to be written down during the next downturn, whenever that will be. I happen to think it is going to be sooner, rather than later.
|
|
Registered User
Joined: 10/7/2004
Posts: 2,126
|
Seems like puts will give you a greater edge base on your certainty
|
|
Registered User
Joined: 10/24/2005
Posts: 101
|
BigBlock,
I want to buy puts, but the premium seems really high. Especially something like a Jan 08 put.
What type of puts or calls seem to be profitable for you?
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
jryanweb,
Figure out how many shares you want to be short, then use the delta to decide how many puts you want to buy.
Example: Short 100 shares HOV.
There are many ways to accomplish this. You could buy 1 deep ITM June put, which will have a delta close to 100. They aren't very liquid, but you are paying much less time premium.
You could also buy 2 ATM puts, say with August expiration, with a delta of 50. IF the stock stalls, you are losing money due to theta--time decay.
You could also buy some OTM puts with a long time to expiration--say 3-4 of the Jan 08 25's. I haven't checked the real delta, I'm just guessing. Each of these positions will have a delta of 100.
FWIW, I prefer either the deep ITM strategy, or the ATM strategy. If I buy OTM options, I usually use a spread (ie. calendar). All of this is described in McMillian's book on options.
|
|
Registered User
Joined: 10/24/2005
Posts: 101
|
Closed out my short since the market is in a rally mode.
Gonna see if KBH and BMHC will rally up to the trend line. When that happens, I'll short it again.
|
|
Registered User
Joined: 10/24/2005
Posts: 101
|
Short KBH @$52.30 again since market is tanking.
Gonna try to short BMHC if it does intraday rally.
|
|
|
Guest-1 |