[NVR] first post

According to its Yahoo profile, NVR is a US builder of single family homes across the US under the names of Ryan Homes, NVHomes, Fox Ridge Homes and Heartland Homes trade names.  It also offers various mortgage related services to its home building customers through its mortgage banking operations, as well as provides title insurance and performs title searches in connection with mortgage loan closings.  It has obviously been doing something right, it would seem, based on its amazing chart below which took it from $40 in Y2K to its recent peak at $1722.

Every obstacle in the road seems to have been little more than a temporary setback for this company, a pothole in the road.  This one is worth watching because of the HT in the middle of the two waves meaning that this is an A-B-C correction.  Whatever energy source has been fueling this is therefore not likely sustainable.  If this C wave is to be a standard Elliott motive wave then it looks like a pullback is due that should find support at the lower rail.



However, if that lower rail cannot hold at the red circle then we will have to believe that the real model is found in the log scale below.  In this model, the C wave is WC in nature.  The 5th wave has already broken out the top rail and is now breaking back down into the channel.  If it takes out the lower rail then the next stop for this will be to collapse back below where it started at $40.  Why?  Because this whole move looks corrective to me (which means unsustainable). 



The fundamentals give no hint of this possibility. The balance sheet for this does not look that bad.  Cash is $397mn, debt $599mn, forward PE 12.  Trailing PE is 17 which is high but the earnings and revenues have been growing enough for the market to buy every dip. PS is normal at 1.18.  PB is high at 4.95.  Nothing about this is sounding any alarms but the chart does not lie and the chart is more important BY FARRRRR than the so called fundamentals.  The fundamentals seemed great when I called a top on IBM in the low $200 range (recently traded at $117) and they seemed great when I penned my original topping call on Western Digital.  It was trading for $105 back then.  Now it is in free fall at $42. 

So much for Wall St "fundamentals".  And no, it won't be different for NVR this time.  Once the dam bursts this will be tanking, probably the day after Cramer pumps it on his show.  I always like to have a list of future short sale candidates lined up waiting for a trigger alarm to be tripped (the breakdown of that lower rail...).