Weekend Update- Housing index and Stocks:HGX, MTH, RYL, TOL

The Housing Index - Philadelphia (HGX)
The daily and weekly chart of the HGX shows that it is in a neutral symmetrical triangle pattern. It is in a wave 3 to 4 pullback and looks to be completing an ABC. Normally in a wave 3 to 4 correction an index or stock usually retraces 50%, but in bullish waters the pullback will be shallow around 25% max. The HGX is in a bullish outside reversal, and in a bullish trend reversal on all time frames (Monthly, Weekly, Daily). The monthly HGX chart shows that it is a failed topping pattern. This week the HGX had a great week to close up 7.37% at 271.60 on the weekly chart. Confirmation that the HGX breaks out is above 275.00. Once the HGX breaks out, the housing sector will be a new portfolio theme in the weeks ahead.

Meritage Homes Corp. (MTH)
The daily chart of MTH shows that it is in a falling wedge reversal pattern. MTH was a great play this week if you got in near the lows at $52.42. As you can see it went up every day and closed right at the downtrend line @ 59.02. Confirmation that this is indeed a bullish falling wedge reversal is not until a break of the down trend line above $60.00. Although the Aroon is still in a bearish trend reversal the PPO is showing bullish divergence, and the stochastics are turning up. In addition, the stock scan has given MTH a buy signal. Medium term price target is at the 50% Fibonacci retracement level at $74.00. MTH is a front runner in the sector and once it breaks out the other homebuilders will follow.

Ryland Group, Inc. (RYL)
RYL on the daily chart is also in a falling wedge reversal pattern. RYL, like MTH, was a great play this week if you got in near the lows at $64.38. As you can see from the chart RYL broke though its downtrend line at around $68.00. Although the Aroon is still in a bearish trend reversal the PPO is showing a nice bullish divergence, and the stochastics are turning up. In addition, the stock scan has given RYL a buy signal at $69.3. Intermediate term price objective is $85.00-$89.00 within the next 47 trading days.

Toll Brothers, Inc. (TOL)
The monthly chart shows that TOL has a great looking chart. It is in the process of trying to break out of it's recent downtrend channel. The pivot is $34.19 and the breakout point is $35.00. No buy alert has been triggered yet, but TOL is on the watch list.