Comstock Homebuilding Companies (CHCI)

Company

"Comstock is a production homebuilder that develops, builds, and markets single-family homes, townhouses, mid-rise condominiums, high-rise condominiums, mixed-use developments and condominium conversions. The Company currently markets its products under the Comstock brand in the Washington, D.C., Raleigh, North Carolina, Atlanta, Georgia and parts of the Carolinas. The company targets a diverse range of buyers of moderately priced homes." (company website)

CHCI 3-month stock chart

Buy

Buying Comstock feels completely counter-intuitive. The housing market has, after all, been tanking. Yet CHCI seems to be climbing out of the hole it has been in since bottoming in 2006 (see sidebar). My buy order fired automatically at the beginning of the day; from what happened afterwards it's clear that I could have paid less.

  • Price momentum (PPO) — picking up generally and quite rapidly since mid-December, although I don't like that the line has tipped down in the past days
  • Trend (ADX) — rising since mid-December, and now over threshhold (20)
  • Money flow (CMF) — strong inflow
  • Relative strength (RSI) — strengthening steadily since mid-November
  • Volume — many higher-volume up-days in December

Based on technical analysis, MarketEdge calls CHCI a "buy" in a "weak upward trend."

Sell

gain Bottom line
2%

Volume has been dropping off, buying pressure (+DI) has been dropping, and relative strength (RSI) stalled out below 70. It has been almost exactly three months since the last quarterly report, and I can't find a date for the next report. I always get nervous when a company doesn't announce when it will report results. With the stock overbought, this seems like a good time to pull back to the sidelines on CHCI to await results. There might be a nasty surprise coming.