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RYL - Ryland Group, Inc.Week Ended: 1/27/01
Price 48.88 P/E Ratio 9.26 52 Week High 47.69
Last Week + 1.75 Earnings Date 1/23/01 52 Week Low 15.19
Picked At 42.81 Date Picked 1/4/01 Sector Capital Goods
Current 48.88 Open 47.00 Change 1.81
Low 46.56 High 48.94 Volume 257,600

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 25, 2001

Ryland was able to produce a strong intraday rally on Wednesday, trading as high as $47. However, it then fell in afternoon trading to its eventual close of $44.24, which is where we closed this play ahead of today’s earnings announcement.

Picked on January 4th @ $42.81
Profit/Loss = +1.44 (+3%) (Stopped Wednesday @ $44.25)
Best Profit = +4.88 (+11%)

January 24, 2001

Dropped ahead of earnings, write up to follow.

January 23, 2001

Ryland’s unique approach of combining homebuilding with mortgage services has enabled the company to capture more market share through its one-stop shop medium for homebuyers. The stock has reflected the company’s growing market share and has continued to rally higher. On the day, RYL shares regained lost support at the $45 mark with a sharp $2.56 rally to $45.06. Volume came in stronger than the three-month average at 144,300 shares traded, which is a good indication that momentum players may be coming back for an earnings play ahead of tomorrow’s announcement. For its two previous earnings reports, RYL has also staged a small rally just prior to the release. We think that these two factors will present us with a good place to lock in profits ahead of Wednesday’s close. With this in mind, we’ll be looking for quick intra-day advances to $46 or $47 to trigger our exits. Furthermore, we recommend using trailing stops to help lock in gains. For support, we’ll look for an initial base to come at $45, bolstered by the 5-dma of $44.98. The 10-dma of $44.66 will present the next level of support. Remember to plan your exit strategies ahead of Wednesday’s close, as per our policy.

Picked on January 4th @ $42.81
Change since picked +2.25
Stop Loss @ $39.00

January 21, 2001

Homebuilder and mortgage finance company, Ryland, faced ample selling pressure today, as a profit warning from Home Depot sent shares slumping. Record cold weather and rising consumer debt levels are two important factors that are putting pressure on home building supplies, Home Depot said. This was enough to upset the apple cart for most all the homebuilding stocks. On the day, RYL shares hit an intraday low of $41.63, but found good support at the 20-dma ($41.87) and recovered to $43.19 by the close. However, two key support levels at $45 and the 10-dma of $44.36 were violated by the 3.81-point decline and will now be switched into resistance. With that said, we will now be looking for entry points to come at these levels, when good volume of 110,000 shares or more can accompany a sharp advance. Further opposition will be more challenging at the all time high of $47.69. A strong close above this level could potentially signal the next leg up, so watch this level carefully. On the downside, we’ll now be looking for today’s test of the 20-dma of $41.87 to present the initial foothold. Stronger support lies at the $40 mark and just lower at the 50-dma of $39.15. Sharp bounces from either of these support levels will present us with low-priced entries and the potential for quick profits. However, choose your entry points wisely and remember to confirm your buys with good mid-day volume of at least 55,000 shares.

Picked on January 4th @ $42.81
Change since picked +0.38
Stop Loss @ $39.00


Copyright 2001

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