Liz here, in the hospital! Apparently, what I thought was my unborn child not liking seafood was actually a full-on kidney infection.


I first realized something was wrong when I woke up yesterday morning and heard my big child watching Nickelodeon in the other room. I very distinctly heard a commercial advertising killers for hire, at which point my husband took my temperature and said “we need to take you to the hospital.”

I’ll be here for another day or two, ON DRUGS, but everything is more or less under control and I did get you a CJ trade for today.

Go here to grab it right now.

CJ here. Liz has been feeling under the weather for the last few days, but she’s a trooper and she wanted to make sure that you got something in your trading inbox today. So I’m here to drop some market knowledge on you right now, on my way to Chicago for the Money Morning LIVE Summit.

This morning’s trade returned to the “chop” that we’ve become accustomed to for the last three weeks.

Earnings from Target widened the hole in the bottom of the Retail sector after Wal-Mart (WMT) and Home Depot (HD) saw some seriously bad earnings reactions on Tuesday.

In addition, the Homebuilders are flagging again as this morning’s data shed more light on something you and I already knew: The housing market is ready to take a break.

We’re not talking 2008 break – at least not yet – but this sector has really been holding on to some “hope” for the last few weeks as the rapid ascent of interest rates have now leveled off after the Fed’s last meeting.

My Night Trader subscribers grabbed a long-term put on the SPDR Homebuilders ETF (XHB) a few months ago as the signs have been written on the wall.

Now, they closed out half of the position at 100% weeks ago, but there’s more meat on the bone in this sector as the downside risk far outweighs the upside potential.

Diving into the group with my “Best in Breed” model uncovered more than a few bearish candidates in the sector. Shocker, I know.

So this is the point where Liz would typically tell you that she hit me up for some notes and a trade, so here you go, Liz.

Lennar (LEN) is one of the heavy hitters in the home construction space. They dig holes and then fill them with lumber and concrete to build a house. That was a license to print money five years ago, but things are getting tough now and LEN shares are wearing out.

The stock is down 32% year to date, that’s big. But when you consider that LEN went from $55 to $4 during the last housing slowdown/crisis, you can see what I mean when I say there’s a lot of meat on the bone for the bears to feast on with LEN.

I got a fresh signal from my Night Trader system this morning while I was sitting in the airport. Yup, that’s right; you’re getting a look at a fresh Night Trader signal – you’re welcome.

The stock has consolidated across this $75 price level since early April. Now, that technical foundation is falling apart.

At the same time, my system pinged me because put option volume on LEN shares is starting to increase at strikes in the low $60 range. This is the same activity I’ve noted on the QQQ and several companies as “smart money” is preparing for the next drive lower.

Both the 20- and 50-day moving averages are just overhead current prices, adding pressure to the stock to move lower over the next 4 to 6 weeks.

Finally, the bottom Bollinger Band is sitting just below the $72.50 price level. A break of this will begin a volatility “moment” that trades the stock towards a $65 price target.

All this adds up to a “sell the rumor” trade ahead of the company’s June 16 earnings report.

Here’s how you trade the move to my target price:

Buy-to-open the June 17, 2022 LEN $72.50 put using a limit price of $4.60 or better. That option is currently trading at $4.40 as I type this.

Here’s your chart on the stock with all of the technicals I’ve mentioned above.

Target 100% profits on this trade, as I expect to see a fast and aggressive move lower in Lennar shares.

Hang in there Liz! Everyone here and in the Trading Today and Money Morning LIVE worlds are pulling for a quick recovery and can’t wait to see your smiling face again.

Chris Johnson

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