PulteGroup, Inc. (NYSE: PHM) May Reach $14 - $15 Soon

Denver, CO, 07/26/2013 (Avauncer.com) – PulteGroup, Inc. (NYSE: PHM) (Closed: $16.55, Down: 10.30%) announced a quarterly result below market expectation yesterday and the stock was whipped in the market. The volume at 32 million was thrice the average volume of 10 million.  It was the second consecutive day of a big drop.

The stock was a direct participant of the bull market of 2002 – 2007 and appreciated by 12 times to $48 by 2005. But the next bear market affected it in the same way when it lost the whole rise and failed to bounce in any significant way in the period of 2009 – 2010. It finally found a major bottom at $3.29 in October 2011, a level last seen in 1996. The current rally from the 2011 bottom has corrected nearly 50% of the total fall from 2005 to 2011. We can take this as the first wave of a long term turnaround and the ongoing correction as the second wave as 5 legs are clearly visible in this rally, a sign of an impulse move. A second wave generally corrects up to 61.8% but there are different observations pertaining to that. We must keep the retracement levels of the whole rally in mind as those could be important support levels.

The weekly chart clearly shows a Head & Shoulders pattern. By the pattern implication, we get the initial target as $15.10 which could be achieved soon. Below that waits $14.55 - $14.99, the area of the low of the internal 4^th wave of the major 3^rd wave of the previous rally. A normal Zigzag correction gives us a target of $13.85, which nicely coincides with the 50% retracement level of $13.88. Finally, the full target implication of the pattern gives us $11.06, which is very close to the 61.8% retracement level of $11.38.

So as long as the price fails to settle above $17.90 - $18 comfortably, we can expect $14 - $15 and even $11 levels in the coming weeks.