Monday, November 11, 2013

Lennar (LEN) weekly chart - forms bearish continuation triangle pattern, targeting 28/25 area


LEN corrected lower off the 44.40 peak (May 2013), retracing 38.2% of the 12.14/44.40 upswing. The subsequent 4-month long consolidation has been capped under the 37.87/37.84/37.79 lower ceiling. The recent downside break below the triangle support suggests completion of the bearish continuation pattern, triggering further weakness towards 28.00, 50% retracement, ahead of the 200 week MA at 25.15. Only an upside break through the 37.87 ceiling would negate and signal resumption of the broad uptrend towards 44.40.

American Eagle Outfitters (AEO) forms Head-&-Shoulders base, targeting 200 day MA at 17.90


AEO peaked at 22.97 in October 2012. Then the stock traced a year-long downtrend, reaching a new 52-week low at 13.14 in October 2013. As shown on the chart, it recovered off the low and formed a head-&-shoulders base on breaking through the 15.52/15.67 shoulder resistance line. While the 14.73 (20 day MA) area holds dips near term, the stock has the scope to challenge the 17.90 (200 day MA) area which is also near the 8-month falling trendline resistance. Stop should be placed beneath 14.73. A breakdown below 14.73 would signal topping and resume the broad weakness towards 13.14 for a retest.