Treasury Spike Hammering the Last Nail in Lennar’s Coffin

Lennar (LEN – NYSE)

Tuesday, August 20, 2013

Last week, we warned about the troubles facing homebuilders, as rising bond rates push mortgage costs higher.

Yesterday, we saw the benchmark 10-year U.S. Treasury note yield climb as high as 2.90% – its highest level since July 2011. Yields have gained more than a full percentage point since early May when word began to circulate that the Fed would taper off its asset purchases.

According to Prudential Financial’s Quincy Krosby…

This market’s been toggling and waiting for direction – it’s a scenario in which it’s not just economic data or geopolitical data, but still central bank driven. We’ve always said the road toward interest rate normalization is going to be difficult and dotted by detours and obstacles.

And UBS’ Art Cashin warned that “Alarm bells will go off for stocks once the yield hit the 2.90 percent level.”

LEN

Bottarelli Research Tip: Lennar (LEN – NYSE) is one of the heaviest weighted components on our new favorite homebuilder ETF, the iShares Dow Jones US Home Construction (ITB – NYSE). LEN has already offered upa 3x Sell Signal Stack and a Death Cross, and is currently pressing down on the 38.2% retracement marker for the fifth week running. Once this support breaks (and it will very soon), LEN will drop almost immediately to weak support at the 50% market at $28.16.

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