Home Building Stocks are a Tricky Call

Calling the top of the home building stocks is tricky business. These stocks just keep going and going. For example KB Home (KBH) seems to be topping as of May 17, 2005 but the peak is not definitive and prices could continue to go up.

The Price Direction Indicator (PDI) indicates prices may have peaked and are on the downside. But CTM cumulative returns, a component of PDI, is still on the upside. CTM cumulative winners and return per day have peaked and are on the downside.

So has the stock peaked? Probably it has but if and until CTM cumulative returns peak and move to the downside, the jury is still out.