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Swing Trade Idea (LEN) – May 2, 2022

Market Outlook

Equities sold off heavily towards the end of last week with poor earnings data acting as the catalyst. However, with the macro climate being as bearish as it is, a poor earnings season has shifted the tone to a more bearish one in the short to medium term. SPY is now at 2022 lows and QQQ has now broken below a key support level at $316 which is concerning. Bonds continue to decline with yields rising at a fast pace. Our view for equities is bearish with short term rallies providing good shorting opportunities. 

LEN Trade Idea:

Our bearish trade idea for today is Lennar Corp (LEN). LEN is part of the Homebuilders industry which is experiencing significant underperformance relative to the overall market. From a technical perspective, LEN is on a strong bearish trend but price has consolidated in recent weeks with the 21 D EMA acting as resistance. This consolidation period and failure to breakout higher provides a good bearish opportunity. Both 1M and 6M trends are now bearish and with a Technical Score of 4 (out of 10), LEN is a weak stock that will likely move lower.