Toll Brothers, Inc. (TOL) designs, builds, markets and arranges the financing for homes in residential communities. The stock is currently trading around $37.54 at the upper end of its 52 week range of $28.92-$40.33. The stock outperformed the market this year rallying 9.8% year to date. TOL is scheduled to report earnings before the bell on Wednesday the 27th, and the stock is selling off a bit ahead of the release. TOL is lower on the session by around $0.15 or 0.40% ahead of the release.

Over the past 12 quarters TOL has rallied on earnings day 7 times with an average move of 3.98%. The stock has rallied 5 times in 12 quarters from earnings day to the nearest options expiration. TOL also appears bullish on a chart going into the release. The stock has been trading above the Ichimoku Cloud for a few weeks, and looks as if it could continue the trend in today’s session. The Ichimoku Cloud appears to be maintaining its size indicating a trend that is harder to reverse. This cloud continues 26 bars in the future shrinking only slightly in size, but still indicating a strong bullish outlook. Due to the stock’s historical performance on earnings day and strong technical data, it is hard to justify anything but a bullish trade in TOL.

The options market is currently implying a move of around $1.30 or 3.5% in TOL by next Friday’s close giving us an upside target around $38.84.

Andrew Keene

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