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Play of the Day (For Thursday)
Interactive Chart
Wednesday, March 28, 2001

NVR - NVR, Inc. $165.60 -0.60 (+5.65)

Tuesday's Comment:

NVR Incorporated (NVR) constructs and markets single-family homes, townhouses and condominiums under three trade names: Ryan Homes, NV Homes, and Fox Ridge Homes. The company currently serves 16 metropolitan markets in 10 states. In its largest market, the Maryland Metropolitan area, NVR derived 60% of its homebuilding revenues. The stock has appreciated very nicely over the past year, gaining a phenomenal 200%. Much of the stocks recent price strength can be attributed to NVR's impressive performance in the third quarter. The homebuilder posted a 58% quarterly increase in earnings from the same period a year earlier. Even more interesting, the company only has 8.37 million shares outstanding with 60 million authorized. Sound like a possible split play? We certainly think so! The chart on NVR also looks compelling. NVR shares may have just signaled yet another momentum breakout. Bullish crossovers in both the MACD and Stochastic provide us with further confidence of a potential rally. To that end, we'll look for resistance to come at today's intraday high of $168.25 and then at the $170 mark. Support comes in at the $160 mark, bolstered by the 5-dma of $160.83. Traders looking for an initial position in NVR should look to time their entries when the stock breaches above resistance or recoils from support on strong volume of 40,000 shares traded by midday. We will set our stop at $156.50 to limit our downside risk.

Wednesday's Update:

While the market as a whole circled the drain today, the homebuilders held up well. This superior show of relative strength continues to amaze us, especially in the midst of this weak market. But the more these stocks continue to hold up, the more frustrated the shorts will become, forcing many to cover buy. As more of this cover buying occurs, the stronger the homebuilders become and so on. Adding to the attractiveness of this play is the fact that consumer confidence is on the upswing. This can only be positive as homebuilders gear up for the busy summer home buying season. Turning to the chart, we see that NVR's MACD has issued a buy signal and its OBV is hovering at two-year highs. Resistance for NVR comes in at $168.25, its all- time high and support has recently been confirmed at NVR's 5-dma of $162.75. New entries could be considered on a break of $168.25 or a bounce off of $162.75 on volume that puts the stock on track to do 85,000 for the day. Our stops remain at $156.50 to protect against a reversal.

Picked on March 27th @ $166.20
Change since picked -0.60
Stop Loss @ $156.50 

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