Trading Idea: Momentum Building in Lennar
Published on Thursday, 14 February 2013 08:28 Written by TradersHuddle Wire
New York, February 14th (TradersHuddle.com) - Shares of Lennar Corporation (NYSE:LEN) closed the trading session at $40.83 with its price action in a very tight range, given that calculated support is set at $39.21 and the calculated resistance is set at $41.55.
Lennar Corporation (NYSE:LEN) builder of single-family attached and detached homes. The Company also provides mortgage financing, title insurance, closing services and other ancillary services.
Lennar's stock price action indicates that both sellers and buyers are materializing very close to each other. This signals an area where momentum is building, since the stock can resolve by breaking out of the developing tight range.
Traders wanting to establish a position should pay close attention to Lennar's price action, as any movement outside its predefined range of $39.21 and $41.55 could grasp the attention of momentum buyers that look for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support could spark above the average selling. A tiered approach could be the best way to start a position; enter into it while the stock is in the tight range, and then add to this position as it breaks and closes above resistance.
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