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"Intrigued?
We are. We say the selloff was wildly overdone and RSI readings confirm that. Even during the bear market of 2008 Pulte never saw an RSI dip below the 20 line.
We also like the mortgage bailout story and apparently so did the market. Pulte moved higher by 30% since bottoming last week, along with a few other big names in the sector. Pulte has also seen some 50,000 shares purchased by insiders in the last six months. We’re betting more will show up imminently.
Wall Street Elite recommends a speculative purchase of Pulte Homes April 2012 $6 CALLS, now trading at $0.60."
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A weak foundation
If things are looking up for mortgage insurers, then it's got to be a good time to buy homebuilders, too, right? There seems to be a consensus building that now's a good time to get into PulteGroup, Toll Brothers (NYS: TOL) , and KB Home (NYS: KBH) . Heck, even home prices turned up, rising 3.6% in the second quarter.
But look again at the rising level of delinquencies and foreclosures, the persistently high unemployment rate, and an economy that can't get its footing, and you'll see that the analysts thinking Pulte has more upside are simply whistling past the graveyard.
CAPS All-Star Chemdawg agrees there's still a very long road before there's any light at the end of the tunnel:
"not the strongest in a group of businesses all facing significant headwinds....just keeps losing money....recovery is still 18 months out and Pulte may not be here to see it..."
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