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RYL - Ryland Group, Inc.Week Ended: 1/20/01
Price 43.19 P/E Ratio 8.30 52 Week High 44.19
Last Week + 2.44 Earnings Date 1/23/01 52 Week Low 15.19
Picked At 42.81 Date Picked 1/4/01 Sector Capital Goods
Current 43.19 Open 46.88 Change -3 13/16
Low 41.63 High 46.88 Volume 382,600

Company Description

The Ryland Group, Inc. and subsidiaries consist of two business segments: homebuilding and financial services.For the 9 months ended 9/30/00, revenues increased 12% to $1.58B. Net income applicable to Common increased 11% to $50.2M. Revenues reflect an increase in the number of closings and a higher average closing price. Net income waspartially offset by increased S/G/A expenses due to a increased incentive compensation expense.

Play Description

January 4, 2001

The Ryland Group (RYL) specializes in on-site construction of single-family homes and condominiums. The company also provides mortgage related products and services to retail customers through its subsidiary, Ryland Mortgage Company. Most recently, the company has been repurchasing stock in an effort to improve its long-term prospects and to enhance shareholder value. Even more appealing, though, is the stock’s recent breakout. Today’s advance broke into new territory and set a new all-time high of $44, which is why we’re picking up RYL as a momentum play. A closer look at the chart will show that the stock has a tendency to advance sharply higher when shares break into new territory. Furthermore, strong volume of 495,900 shares traded confirms the breakout pattern. With this in mind, we believe that RYL could be on route to test the $45 mark. However, to reach this level the stock will initially need to break above near-term resistance at $44. Should this occur, we’ll look for stiffer opposition to come at the $50 mark. We’ll look for entry points when RYL can advance through resistance on good volume of 245,000 shares. As for support, look for RYL to have an initial base near $42. Secondary support should come at the 5-dma of $40.87, with additional support at the $40 mark. Look for entries when mid-day volume of 120,000 shares can accompany a bounce from any of these support levels.

Picked on January 4th @ $42.81
Change since picked 0.00
Stop Loss @ $39.00


January 18, 2001

RYL has continued to grow despite a slowdown in home sales. Furthermore, declining mortgage rates should serve as a catalyst for rejuvenating housing starts and put RYL in an even stronger growth position. The stock has done a good job in reflecting the fundamental strength of the company, as witnessed by its run to new highs earlier in the week. Currently, RYL shares have traded flat from Tuesday’s breakout and volume has come down to around 150,000 shares traded. What we’d like to see develop from here is a good consolidation base on decreasing volume. This type of formation could set the stage for the next breakout. So, should this scenario develop, we’ll look for initial resistance to come at the all time high of $47.69. A strong close above this level will trigger our entries. Further up, secondary resistance is likely to get much tougher at the $50 and $55 levels. Confirming your entries with heavy upside volume of 110,000 shares or better will reduce the chances of a fake out. Should the stock consolidate further, we’ll continue to look for the upper channel line at $45.50 to $45.69 to represent the earliest support base. The $45 mark will likely hold stronger support, braced by the 10-dma of $44.32. Further support we’ll likely come at $40, just ahead of our stop at $39. Use sharp bounces from support as low-risk entry points, when augmented by good mid-day volume of 55,000 shares.

Picked on January 4th @ $42.81
Change since picked +4.19
Stop Loss @ $39.00

January 16, 2000

Ryland’s emphasis on the first and second-time homebuyer markets, which generally tend to be more responsive to interest rate changes, might now produce stronger sales for the company since the Fed’s recent easing of rates. As for the stock, more momentum buying continued to send RYL higher today, as shares eclipsed resistance at $45 and set a new intraday high of $47.69. Excellent volume of 318,600 shares also accompanied the rally, which likely powered the stock through stiffer resistance at the upper channel line ($45.50-$45.69). A possible explanation for the heavy buying may have come from Citigroup’s earning announcement, which showed healthy growth in mortgage services. Furthermore, solid gains were made in the NYSE Financial Index (NFX), which rose 8.77 points or 1.41%. This suggests that sector gains may have also contributed to RYL rally. With these points in mind, we think that RYL remains poised for further gains throughout the week. We’ll look for initial resistance to now come at today’s intraday high of $47.69, followed by a much tougher challenge at the $50 mark. Remember to confirm entries when the stock can break above either of these levels on good volume of 110,000 shares or better. For support, we can now expect the upper channel line at $45.50 to $45.69 to represent the first foothold. Just lower, the $45 mark should hold greater strength, bolstered by a previous all time high and the 5-dma of $44.39. Should the stock test further lows, support should continue to get stronger at the 10-dma of $42.91 and at the $40 mark, braced by the 30-dma of $40.05. Our stop at $39 will be a safety net against further declines.

Picked on January 4th @ $42.81
Change since picked +4.00
Stop Loss @ $39.00

January 14, 2001

Within RYL’s homebuilding operations, the company is continuing to improve its market dominance through new land development strategies. This has allowed the company to gain greater penetration of existing markets and has helped keep sales and margins growing at a steady clip. As for the stock, shares continued a steady ascent to higher ground and set another new 52-week high of $45, despite the fact that lighter volume of 103,800 shares accompanied the advance. To get RYL past its current resistance at $45, the stock may need to muster heavier volume of at least 150,000 shares. We make mention of this because RYL has recently proven that it takes volume of this caliber to break new highs or to ascend through resistance. So, should this scenario unfold, we’ll look for shares to face further resistance at the $50 and $55 levels. On the flipside, we can now expect the stock to find its first intraday support at the previous high of $44.19. Secondary support is likely to come at $42, bolstered by a short-term bottom and the 10-dma of $42.31. The strongest base is still expected near $40, which is now strengthened by both the 20 and 30-dma’s of $40.28 and $39.66, respectively. Quick reversals from either of these levels will present potential entry levels, when followed by good mid-day buying of at least 50,000 shares. We’ll keep firm stops set at $39 to protect our backside.

Picked on January 4th @ $42.81
Change since picked +2.13
Stop Loss @ $39.00


Copyright 2001

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