After a sustained bear run, things are finally looking up for Hovnanian Enterprises, Inc. [NYSE: HOV]. The stock closed Thursday’s session with a bullish engulfing candlestick pattern. This followed a rally that saw it hit highs of $7.22 before closing the day at $6.99. This price surge was also backed by significantly high volumes, which stood at 479,687 shares in the day.
HOV’s momentum is driven by a strengthening job market, and low rates. Analysts expect that, the strengthening job market, and a low rates environment, could spur growth in the homebuilding market. HOV happens to be one of the big players in this market, which makes it a potentially huge beneficiary. Growth in demand would translate to better revenue numbers, and a boost to the stock price, and by extension, its market cap.
A week ago, the company’s stock tumbled on news that it had received a delisting notice from the NYSE. It received this notice after its market capitalization averaged less than $50 million in 30 consecutive trading session. Nonetheless, HOV will continue trading, and will notify the NYSE of their plan to conform to the NYSE standards. At the time of writing, the company had a market cap of $47.32 million, which is rising as bullish momentum rises.
In essence, this bullish reversal could signal a potential rally for HOV in the near-term. Technical indicators such as the RSI also support such a move. HOV’s RSI reading currently stands at 43.57, which is indicative of early bulls. If this momentum sustains, then the next key level to watch is $8.53.