The DJIA closed at a high this year -- in fact, the highest it has seen since 2001. The S&P 500 is within reach of a yearly high too. The Nasdaq is the lagger of the broader averages, but hopefully will do its catch-up. The only real concern is the lack of volume as of late. 

As I have mentioned in previous articles, I look for an edge, something that puts the odds in my favor. One of the most consistent ways to do this is validation of several stocks within an industry group, all with the same set-up. Looking at the Homebuilders is a perfect example of what Iââ,¬â"¢m talking about. 

Ryland Group (RYL) has had a strong sell-off since mid January. It found some minor support and has made a small bounce. I will be watching for buying to slow down and another leg down.

Ryland Group


Beazer Homes (BZH) is almost exactly the same setup.

Beazer Homes

Kb Home (KBH) same sell off, same small bounce.

Kb Home

There are several more Homebuilders that are showing the same pattern. Iââ,¬â"¢m looking for an opportunity for another leg down to possible test the October lows. One thing needs to be mentioned: the market seems to want to break out, but we are still in a sideways market. So be cautious of a pullback in the broader averages. Remember to use your stops to protect your profits and principal.

Disclaimer
The article submitted to the Tiger Shark Publishing LLC is presented for informational purposes only and should not be construed as a solicitation to buy or sell securities or securities derivatives of any kind, nor serve as any type of investment advice or strategies. Actual results may differ greatly from expressed opinion. The author expresses a personal opinion and will not assume any responsibilities of the action of the reader.

Tom Incorvia is a swing trader with 18 years of experience in the financial markets.  E-mail him at tincorvia@gmail.com.