KB Home operates as a homebuilding and financial services company in the United States. The company constructs and sells various homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, move-up, and active adult homebuyers. It also provides title and insurance services to homebuyers. As of November 30, 2012, the company delivered 6,282 homes. It has operations in Arizona, California, Colorado, Florida, Maryland, Nevada, New Mexico, North Carolina, Texas, and Virginia. The company was formerly known as Kaufman and Broad Home Corporation and changed its name to KB Home in 2001. KB Home was founded in 1957 and is headquartered in Los Angeles, California.

To review KB’s stock, please take a look at the 1-year chart of KBH (KB Home) below with my added notations:

1-year chart of KBH (KB Home)

KBH has formed a nice down-channel chart pattern over the last (3) months. A channel is simply formed through the combination of a trend line support that runs parallel to a trend line resistance. When it comes to trend lines, remember that any (2) points can start a trend line, but a 3rd or more confirms it. You can see that KBH has (5) points of channel resistance (red) and (3) points of channel support (blue). Following the KBH channel can provide you with both long and short trading opportunities.

The Tale of the Tape: KBH has formed a common pattern know as a channel, in this case, a down channel. A long trade can be entered on a pullback to the channel support, which at this point seems to be around $15, or on a breakout through the channel resistance, currently sitting at $18. Short trades could also be placed at channel resistance or if KBH were to break below the channel support.

Would you like assistance in making your TBS trades? If so, email me at Christian@yolopub.com and let’s talk about working together one on one!

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT