Subscribe to RSS feeds Bulkowski Blog via RSS

Support this site! Clicking the links (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral. My books...

Encyclopedia of Chart Patterns 2nd Edition book.
Chart Patterns: After the Buy
Getting Started in Chart Patterns, Second Edition book.
Trading Basics: Evolution of a Trader book.
Fundamental Analysis and Position Trading: Evolution of a Trader book.
Swing and Day Trading: Evolution of a Trader book.
Visual Guide to Chart Patterns book.
Picture of Bumper.
Kindle
Picture of the head's law.
Kindle

Bulkowski's Blog Archive: BZH

Class Elliott Wave Fundamentals Psychology Quiz Studies Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
As of 11/13/2019
  Indus: 27,784 +92.10 +0.3%  
  Trans: 10,843 -116.63 -1.1%  
  Utils: 844 +12.11 +1.5%  
  Nasdaq: 8,482 -3.99 0.0%  
  S&P 500: 3,094 +2.20 +0.1%  
YTD
 +19.1%  
 +18.2%  
 +18.4%  
 +27.8%  
 +23.4%  
  Targets    Overview: 10/31/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,150 or 2,950 by 11/15/2019
As of 11/13/2019
  Indus: 27,784 +92.10 +0.3%  
  Trans: 10,843 -116.63 -1.1%  
  Utils: 844 +12.11 +1.5%  
  Nasdaq: 8,482 -3.99 0.0%  
  S&P 500: 3,094 +2.20 +0.1%  
YTD
 +19.1%  
 +18.2%  
 +18.4%  
 +27.8%  
 +23.4%  
  Targets    Overview: 10/31/2019  
  Up arrow28,200 or 27,100 by 12/01/2019
  Up arrow11,300 or 10,100 by 11/15/2019
  Up arrow870 or 800 by 12/01/2019
  Up arrow8,700 or 8,200 by 12/01/2019
  Up arrow3,150 or 2,950 by 11/15/2019

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners.

 

Blog Posting: March 19, 2008, Housing Head-and-Shoulders Bottom?

Beazer Homes on the daily scale

The chart shows an unconfirmed head-and-shoulders bottom in Beazer Homes. It becomes a true head-and-shoulders bottom when price closes above the neckline (shown in blue). None of the stocks that I will mention in a moment are confirmed, so buying them now is a risky endeavor. I show this as an example of the genre, so you can get ready for the future.

I like Beazer the best because the head-and-shoulders bottom forms at the bottom of a flat base. Once price pushes above the flat base, it stands a better chance of continuing the up move. Of course the housing industry is not the best performing of the bunch -- it ranks 29 out of 48 -- but it used to be dead last (48). What I find unusual is the number of housing stocks that are forming the same head-and-shoulders bottom pattern. Here they are.

  • Beazer Homes (BZH) -- the one shown above
  • Brookfield Homes (BHS) -- not a very pretty one
  • ITB -- This is an exchange traded fund
  • KB Home (KBH)
  • Lennar (LEN). This has a wonderful shape and that may mean it is more likely to fail
  • Toll Brothers (TOL)
  • WCI Communities (WLI)

I mention the fine shape of the head-and-shoulders bottom in LEN. It has been my experience that the best looking patterns have a higher probability of failing, but this is not based on measured results, just a feeling.

Top

Aftermath

The stock of Beazer Homes on the daily scale

Price confirmed the head-and-shoulders bottom when it closed above the neckline, three days after my blog post. Then price threw back (AB), climbed again (BC), and threw back again (CD). The unsteady move would give a trader or investor an upset stomach. While the swings may not look like much, they represent a 25% drop for the first swing (AB) and 20% for the most recent swing, CD.

-- Thomas Bulkowski

 

 

 

 

Top 

See Also

 

Written by and copyright © 2005-2019 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Some pattern names are the registered trademarks of their respective owners. Congressional Virus: The computer locks up, and the screen splits in half with the same message appearing on each side of the screen. The message says that the blame for the gridlock is caused by the other side.