Technical Analysis Report - Is It Prudent to Hold This Real Estate Stock – FOR

 Forestar Group Inc

Forestar Group Inc (NYSE: FOR) is a real estate company that operates as a residential lot developer. As per our previous recommendation on FOR as on February 25, 2022, we recommended a ‘Speculative Buy’ rating on the stock at USD 17.53 from the technical analysis standpoint. The stock made a high of USD 18.73 on March 03, 2022 and witnessed an upside gain of ~6.85 percent from the recommended entry-level and post that entered the correction phase. However, considering the recent price action, support level and technical indicators analysis, we are of the view that the stock may witness an upward direction for the next couple of sessions (1-2 weeks), and hence recommend a ‘Hold’ rating on the stock at the close price of USD 17.64 (as on March 29, 2022). The summary of our previous ‘Buy’ rating, revised target levels, and price movement since the previous recommendation for FOR is provided below: 

Price Action Analysis (on the Weekly Chart)

FOR has been consolidating around a crucial support level USD 16.45 for the past 3 weeks and recently started to move upside, indicating the possibility of an up-move hereon. Now an immediate resistance level for the stock appears at USD 20.00 and this level may be tested in the short-term (1-2 weeks). A further move above USD 20.00, backed by volumes, may extend buying in the stock.

On the weekly chart, RSI (14-period) is recovering from lower levels and showing a reading of 39.98. However, the CMP is below the trend following indicators 21-period SMA and 50-period SMA which may act as the resistance levels for the stock.

Conclusion:

Based on the above-mentioned price action and technical indicators analysis, we can conclude that Forestar Group Inc is still looking technically well-placed on the chart, and we recommend a ‘Hold’ rating on the stock at the close price of USD 17.64 (as on March 29, 2022). 

Note 1: Investors can consider exiting from the stock if the Target Price or Stop loss mentioned as per the technical analysis has been achieved and subject to the factors discussed above.  

Note 2: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

A trailing stop-loss is a modification of stop-loss in case of favourable movement in the price to protect the gains. We suggest Investors to Trail the Stop-Loss as per the aforementioned levels if the stock price achieves more than 60% of the Target 1. Investors should consider exiting from the position as per the Trailing Stop-Loss level if the price starts moving downwards after achieving more than 60% of the Target 1. 

The reference date for all price data, volumes, technical indicators, support, and resistance levels is March 29, 2022. The reference data in this report has been partly sourced from REFINITIV.

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar

Note: Trading decisions require a thorough analysis by investors. Technical reports in general chart out metrics that may be assessed by investors before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.