Hovnanian Enterprises, Inc [NYSE: HOV] has had a good run since late August. In the last HOV news article titled, “Hovnanian Enterprises (HOV) posts 132% short-term gain – Sustains bullish momentum for a month”, it was noted that HOV was trading around $15.30. At that time, it was noted that as long as future projections on company performance remained positive, HOV could keep pushing higher. It was also noted that it had hit a high of $16, which was a major resistance point at the time. Breaking past this price level would have meant increased bullish momentum in this stock. It did break that level, and went on to hit yesterday’s highs of $28.60. This has been quite the run especially since the first news article highlighting HOV was when it was trading at only $6.88. This two month run from $6.88 to a high of $28.60 has presented a total gain potential of roughly 315%.
Looking at the chart above, yesterday’s huge bullish candle was an indicator that bulls are likely still in control of HOV. In yesterday’s session, the volume remained high and stood at 474,920 shares traded for the day. It is an indicator that investors still have their eyes on this stock. However, after 5 consecutive sessions of strong gains, investors can expect a correction in the near-term, as traders take profits. It has already corrected three times in the last two months, and each of them was followed by new highs.
The company has been bullish because of the current low rates environment. That’s because, with low mortgage rates, it means that more people are able to afford homes, which is a plus to the demand for home-builders like Hovnanian Enterprises. As of late September, the commerce department reported that home sales for newly constructed units had grown by about 7.1% since July. If these numbers keep growing, HOV stock could sustain its bull trend.
In the day, the key factor that could play a role in the equity markets is Brexit. The British Prime Minister has already hinted at a great new deal on Brexit. This could help ease geopolitical pressure on the markets, and push U.S indices higher when markets open.