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Christian Tharp, CMT

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Five Star Stock Watch: Lennar Corporation

Doesn't it always seem like you hear about a hot industry or sector after the move is almost over?

Wouldn't it have been nice to get into that hot sector or industry of stocks before the run came to an end?

Well, remember when the homebuilders were hot towards the end of 2013? What if they were about to get hot again?

Below is a homebuilding stock that might be getting ready to make a move.

The company: Lennar Corp.

Ticker Symbol: (NYSE: LEN)

Sector: Industrial Goods  

Industry: Residential Construction

Lennar Corporation is engaged in homebuilding activities in the United States. The company operates through Homebuilding East, Homebuilding Central, Homebuilding West, Homebuilding Southeast Florida, Homebuilding Houston, Financial Services, Rialto Investments, and Lennar Multifamily segments.

Related: Five Star Stock Watch: Groupon

Its homebuilding activities primarily include the construction and sale of single-family attached and detached homes to first-time, move-up, and active adult homebuyers, as well as the purchase, development, and sale of residential land. The company also offers real estate related financial services, including mortgage financing, title insurance, and closing services for home buyers and others.

Please take a look at the two-year chart of Lennar below with added notations:

You can see Lennar's "hot" run at the end of last year that took the stock from a low of around $31 up to a recent peak of $44. That $44 peak is the same area the stock stalled back in the spring and summer of 2013.

Between the two peaks you can see the bullish cup pattern, which may turn into a cup and handle. The key to this pattern would be a confirmation break through the $44 resistance.

Related: Five Star Stock Watch: Blackberry Limited

Lennar is set to release earnings on March 20, 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Tags: Five Star Stock Watch

Posted in: Long Ideas Technicals Trading Ideas