Sam Collins

Builder Pulte Breaking Out

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Pulte Homes, Inc. (PHM) -- This U.S. homebuilder and financial services stock fell from more than $48 a share in 2005 to under $7 in November.

But the lows in October, November and March form a bullish triple-bottom. And new buy signals from our internal indicator, the Collins-Bollinger Reversal (CBR), and a new signal from the Moving Average Convergence/Divergence (MACD) indicator could be telling us that a major breakout from a long-term base is about to occur

Recently Pulte agreed to acquire rival Centex (CTX).

Standard & Poor's said of the deal, "Should this merger pass both regulatory and shareholder approval, the combined company would become the nation's largest homebuilder … And with $3.4 billion in cash, we think the combined company would be well positioned to weather the housing downturn."

The trading target is $16 to $18. PHM and CTX are expected to report earnings after the close today.

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Sam Collins is a registered, fee-based portfolio manager who may be contacted samailc@cox.net. You can also check out an archive of some of his most recent market outlooks by clicking here.