3 Buys and a Bail: Home Depot, Carrier Global, Tri Pointe Homes & Whirlpool

Welcome back to the exchange. Homebuyers are still under pressure, with mortgage rates holding steadily above 7%. A report from property data provider Adam says one in 37 homeowners now have mortgages that are seriously underwater. That numbers up from the prior quarter, although stillwell below the pre pandemic average of one in 15. So we're taking a look at the opportunities in the housing trade and one name to avoid in that sector. Joining me now for three buys into bail Home Edition is Area Walt, he's the Head of Technical Analysis at Opco. It's good to see you again. Welcome you as well. Let's start with Home Depot, they're reporting tomorrow morning. So that's kind of putting us in the mood here. Those shares have largely been moving sideways about 10% off their 52 week high from back in March. And JP Morgan is warning that this late wet spring and some headwinds in the pro segment could hurt earnings. But are you a buyer here? I am. I think there's enough here and and granted it hasn't really been relatively strong either. But with that said, it is set up tactically attractive from with a very minimal downside risk there. I think it came out of an important base last year. It's coming back testing the breakout level and so I can measure risk at 3:35 that was former very often former resistance become support that's the 200 day average. There was a gap in the price there from a couple weeks ago. I think that's a key level. I think as long as the stock is above that level, it's a buy and I think it moves higher. Interesting. OK, so we'll keep our eyes on Home Depot it and maybe, I mean I do see so many people still working on their homes and that kind of thing is they're kind of stuck where they are. Well, let's move on to Carrier Global. That was the mystery chart. Those shares of the HVAC company, we're at an all time high on Friday, they were reported Q1 results at the end of April. Management said those repair and replace trends remain strong. You think this one is a breakout candidate? I do. And I think the common theme here is that we are constructive of market conditions and I think you want to be in these areas market that typically outperform in a rising market. So that's going to include housing, housing related ideas and carriers. What we would call it hits the the trifecta at the firm it's it's outperform rated thematically we like the industry and it is a fresh break out in the stocks price. It ran right up into that $60.00 level last summer which it's been held back from since 2021. It's been consolidating there finally got through in recent weeks that that's a sign of new demand coming into the stop. Typically you'll see price accelerate at that point. I think the you want to stick with the one buy more on pull backs because we see little identifiable resistance. So interesting and I love little windows like this sometimes into the economy because you think everyone's warning about a consumer slowdown and stagflation in the market momentum and yet you have a such positivity on a name like this. Can those two things both exist at the same time? I I suppose so. I mean I guess it depends on what's what's framing your rhetoric on, on market conditions. I think it's more constructive than that. I see more of a not too hot, not too cold backdrop and I think that inter market stability is going to be good for equity prices. OK, let's move on then to your final buy which is Tri Point Homes, the home builder. Those shares have nearly doubled since 2021. Wedbush says higher prices and lower incentives are potential catalyst for the stock catalyst, higher prices, Why do you like this one? It's another more of a midcap home builder. We cover it at the firm. So it's high on our radar, radar with an outperform rating. Home builders, generally speaking, they've worked, they're established leadership, they've run up a lot. That doesn't mean they shouldn't continue to work. Generally speaking, we've looked back once the cycles leadership is established, they continue through the balance of the cycle and and we think this is the second year of a bull market has room to run. Here's a stock that's already out to new cycle highs. The market tape hasn't been able to do that. I see that as an indication of relative strength, meaning once those market conditions do start to improve again, I think the stock takes off to the upside. It's so interesting not again just going back to what it might say about the rally having legs more broadly like you've insisted multiple times, but also because housing, you might think OK, did well for the early FaceTime to rotate into something more. You know what you heard earlier, defensive, you know, maybe not cyclical, but you know, better inflation hedge something, although maybe real estate is that. So you think housing though can continue to kind of hang with the market if not beat it for the next couple of years at least. I think in terms of these bull market cycles, 70% of them make it to their two year anniversary. Our indicators are not denying that road map. So at least looking out the next six months through the balance of the year, I think that works, that's established leadership. But with that said, sprinkle in some of those newer momentum ideas that are starting to come into the screen, some financial stocks and capital markets. So it's about building diversity around the momentum factor. So our last guest was turning a little cautious on financials, but that's an area that you think actually looks pretty attractive right now. Oh, capital markets screens is probably one of the top industries for us. If you screen out the banks which have really been just this beta trade really over the last since the great financial crisis, you have some really constructive looking charts there that are breaking out through big important levels and they screen well for in our momentum work across capitalizations. And I think there is one of our higher compelling ideas is that related to what I hear is just the incredible strength of the credit markets, you know the kinds of debt that can be raised. Obviously we've talked about the return of the IPO market to some extent and that that becomes a sweet spot I guess for for those exposed stocks. If that's what the drivers is, the charts are telling the story. I think what's notable for us, it's just not one or two of these charts that are doing this. But when you go through that group and you see the broker dealers doing that, some asset managers, private equity name security exchanges and really covering that that entire complex that's those are the charts selling the story and you have these equal weighted indexes moving above levels from the great financial crisis. You really have the setup for structural long term outperformance. OK. So then finally where would that leave you and and I know we have to get to your bail. But real quickly on on sort of the tech and momentum areas more about we just talked about some of the meme trades. Would you fade that whole thing or does that is that fine to run with? No, I'd stay away from low Vol high dividend paying bond proxies. I still you think you want to be offense over defensive that includes tech so industrials, financial techs, those are the three sectors that rank highest for us. I still think that we are in a what I would call a steadily paced secular bull market to be driven by those large growth companies there. I think the steadiness of the NASDAQ is actually underappreciated with long term rate of change levels nowhere close to what we saw in the late 1990s. The setup there is for catch up rather than catch down which is what we've been saying. I got so carried away I forgot about your bail. So there is one stock not to single out Whirlpool too much, but the shares have been on a steady decline since 2021. We know the competitive problems, the price pressures, higher promotions, tighter margins, a lot of headwinds and you'd be staying away from it. Yeah, in a group like we took a real easy one World Pearl. It's been an established downtrend. I always kind of say this, if it looks like this two years, 18 months into a bull market, what does it look like during the downturn And typically the stocks like that just collapse. It just continues to respect that following 200 day average. Excuse me, there's been rallies when when the market typically strengthens but those rallies have just lacked strength on on each one sell strength down the Whirlpool it goes airy. Thanks so much for your time today. We appreciate it. Airy Walt with Opco.

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