Building the right Portfolio

Buy CHCI,

Traders often go after quick risky plays with high volatility, but every once in awhile you stumble on a value play that you can'’t set aside. Comstock Homebuilding Co. is just that. Everybody should have some kind of secure long term stock in their portfolio, CHCI is a good one here's why,

This may seem counter intuitive to be buying a homebuilder when homebuilding has already peaked, and it has. But before writing off all homebuilding stocks, we need to understand the psychology of the market with technical analysis.

Here's the Weekly Chart

• The stock is not trading with its MACD, a quick tell which led me to look at it's daily
  

Here's the Daily Chart

• The Average Directional Index (ADX) shows a move below 40 to suggest that the current trend is coming to an end. A move above 20 would suggest the start of a new trend.

• With the On-Balance Volume (OBV) increasing while the stock is leveling off, it shows that buyers are starting to accumulate the stock, possibly making this a good point to call a bottom.

• Here again, the price is not playing along with it's MACD.
  

Let'’s appreciate the fact that every big money investor has already sold their homebuilding stocks. They knew to sell when things started getting choppy. We are looking at a stock with a P/E of 3.12 and a forward P/E of 3.70. The average P/E in the Residential Construction sector is 6.7! CHCI is not having any unusual problems to merit a P/E of half it's competitors.

To sum it up, CHCI has been cut in half in four months, the sellers are gone, and the gain/loss ratio is very high. Be patient and buy this one for the long term.

Confidence Rating: 5/5 Stars

*Edit* I covered my shares of HANS today, to make a quick four day gain of 33%