Upon Further Review: Google, Lennar, KB Home, Pulte Homes, and Monster Worldwide
A daily feature available on SchaeffersResearch.com is "Upon Further Review." Every day, we'll focus on the day's action of newsworthy stocks that are generating a lot of attention. By digging into the stock's sentiment and technical backdrop, we hope to shed some light on the securities. Appearing in today's Upon Further Review are Google, Lennar, KB Home, Pulte Homes, and Monster Worldwide... While today's rally among homebuilders has been a nice respite, it's unlikely the group's losing ways will come to an end until the last of the bulls leave the building.

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Upon Further Review: Google, Lennar, KB Home, Pulte Homes, and Monster Worldwide

Jocelynn Drake ( This e-mail address is being protected from spam bots, you need JavaScript enabled to view it )\n This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
--> 6/15/2006

A daily feature available on SchaeffersResearch.com is "Upon Further Review." Every day, we'll focus on the day's action of newsworthy stocks that are generating a lot of attention. By digging into the stock's sentiment and technical backdrop, we hope to shed some light on the securities. Appearing in today's Upon Further Review are Google, Lennar, KB Home, Pulte Homes, and Monster Worldwide.

Google: The Great Google (GOOG: sentiment, chart, options) is trapped in a narrow, itty-bitty range of 25 points. Now, for some stocks, a 25-point range would be massive, but for a shareholder of a stock trading near $385, it's frustrating. For nearly a month, the stock has been trapped by resistance around 395 and support at 370. Strengthening these levels is a bevy of option open interest. In the June series, nearly 16,000 calls sits at the 390 strike with another 26,800 lying in wait at the 400 level. On the hand, the June 380 strike has more than 13,000 puts and the 370 put close to nearly 9,800 contracts in residence. Until these contracts expire at the close of the week, there's a good chance GOOG is going to stay trapped in this range. However, things are looking up for the stock starting next week, at least on the options front. Speculators are currently ignoring the stock when it comes to July options. The July 390 call is home to fewer than 5,100 contracts and the July 380 put has just 2,700 contracts in open interest. This light open interest reduces the chances of the stock encountering options-related support or resistance. Furthermore, with equity rebounding off support at its ascending 50-week trendline, Google appears poised to make another run higher.

Monster Worldwide: There are days you just half to shake your head. Last night, Monster Worldwide (MNST: sentiment, chart, options) announced that it has been told to "preserve all relevant information" related to the SEC's informal probe of its past stock-option grants. The company joins the likes of Comverse Technology (CMVT: sentiment, chart, options) and Applied Micro Circuits (AMCC: sentiment, chart, options), which have announced similar investigations. So, what happens on this news? The stock rallies more than two percent. Go figure. However, this action points to an underlying strength in the shares. After shedding more than 42 percent from its May peak, the shares rebounded more than nine percent on Wednesday on no news. What's more, the stock has seen a sizable jump in trading volume during the past several sessions, indicating that there is a good chance MNST has put in a bottom.

Housing Sector: Sometimes you can only take so much negative press before you start to push back. The housing sector is pushing back today, as many of the components of the group bounce back from extremely oversold levels. Morgan Stanley downgraded the shares of Lennar (LEN: sentiment, chart, options), KB Homes (KBH: sentiment, chart, options), and Pulte Homes (PHM: sentiment, chart, options) before the open this morning from "overweight" to "equal-weight." The companies within the sector have trimmed expectations and the various members of the Fed have harped about a slowdown. Now, we are starting to see a steady stream of downgrades from Wall Street. However, with more than 50 percent of all analysts ratings on the sector components at a "buy" or better still and less than nine percent at a "sell," there's ample room for more downgrades.

While today's rally is nice, it will likely prove to be short-lived. The group is still vulnerable to more downgrades from analysts as the last of the bullish sentiment unwinds in the face of the sector's weakening fundamental picture. Furthermore, many of the components are facing some staunch technical resistance that is working to cap today's rally. Lennar and KB Homes have both logged gains of more than two percent this afternoon, but both are also being halted by their declining 10-day trendlines. While today's rally among homebuilders has been a nice respite, it's unlikely the group's losing ways will come to an end until the last of the bulls leave the building.

Jocelynn Drake ( This e-mail address is being protected from spam bots, you need JavaScript enabled to view it )