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M/I Homes Inc - MHO - close: 50.98 chg: +0.83 stop: 49.65

Company Description:
M/I Homes, Inc. is one of the nation's leading builders of single-family homes, having sold more than 60,000 homes. The Company's homes are marketed and sold under the trade names M/I Homes and Showcase Homes. The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Tampa, Orlando and West Palm Beach, Florida; Charlotte and Raleigh, North Carolina; and the Virginia and Maryland suburbs of Washington, D.C. (source: company press release)

Why We Like It:
The homebuilding sector has been a pillar of strength in the market despite all the talk about rising interest rates and worries over a housing bubble. Instead of chasing some of the leaders in the sector like TOL, PHM, and RYL who are all trading near their highs, we're drawn to MHO. MHO looks a lot less overbought and has a chance to play catch up with the rest of the sector. A quick look at the P&F chart shows that MHO is bouncing from a test of support and its buy signal points to a $69.00 target. It is true that analyzing the daily chart shows some mixed signals. Currently the MACD has recently produced a sell signal. Yet we suspect that today's bounce from the $50.00 level could be the beginning of its next leg higher. Plus, bulls have to deal with potential resistance with a trendline stretching from the February and March highs crossing overhead near $52.50 (see chart). That's why we're going to use a relatively tight stop loss under the recent low at $49.65. Traders may want to wait for MHO to confirm today's bounce by trading over the $52.00 level. An alternative entry would be to wait for the DJUSHB home construction index to breakout over the 950 level - then evaluate MHO for a bullish entry point. We are going to set our short-term target at $55.00. Should the play last more than four weeks we will not hold over MHO's late July earnings report.

Picked on June 14 at $50.98
Change since picked: + 0.00
Earnings Date 07/25/05 (unconfirmed)
Average Daily Volume: 143 thousand

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