EarningsBeats.com Digest

Published: Fri, 07/24/20

EarningsBeats.com Digest for July 24, 2020

PulteGroup (PHM) May Have Put A Roof On Its Chart

The good news is that many companies are reporting much-better-than-expected revenues and earnings as earnings season unfolds. The bad news is that it's beginning to look like it's already baked in. Many companies seem to be printing topping candles on heavy volume, which suggests we could be looking at consolidation ahead. Specifically, let's consider PulteGroup, Inc. (PHM), which easily beat its revenue ($2.59 bil vs. $2.54 bil) and EPS ($1.15 vs. $.84) estimates. It saw a nice positive reaction, but unfortunately sold off in the afternoon and finished near its low of the day, printing a bearish shooting star reversing candle in the process:

Listen, the blue circles on the chart are all VERY positive and bullish signals. But Thursday's reversal simply tells us to be careful in the very near-term. I would not at all be surprised to see PHM fall back to the 37-38 area to retest its recent breakout and to potentially test its rising 20 day EMA, currently at 36.28. The current low interest rate environment is ultimately a very good thing for home construction stocks in general, but after nearly a 40% advance in three weeks, it certainly makes sense to see some unwinding.

Happy trading!

Tom Bowley, Chief Market Strategist

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