D.R. Horton Inc. (Friday’s close US$52.16) had a sharp rise from US$26.69 in November, 2016, to US$53.33 in January, 2018, (A-B) and became extremely overbought at the time.
The stock fell below its 40-week Moving Average (40wMA) in early 2018 and settled in a bullish technical pattern known as an Inverse Head-and-Shoulder formation (solid lines) which, especially if it takes 1 1/2 years to form (as in this case), signals a very bullish outcome. The recent rise above the neckline of this formation (dotted line) signalled the breakout and the start of a new up-leg (C).
There is good support at ±US$45; only a sustained decline below US$42-43 would be negative.
Point & Figure measurements provide targets of US$54 and US$59. Higher targets are visible.
Monica Rizk is the senior Technical Analyst and Ron Meisels is the president of Phases & Cycles Inc. (www.phases-cycles.com). And he tweets at @Ronsbriefs. They may hold shares in companies profiled.
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Chart source: www.decisionplus.com