D.R. Horton, Inc. (DHI), the U.S. homebuilder, reported a blowout quarter earlier this week. The company crushed expectations and hiked its dividend by 14%. As a result, investors pushed the stock up 9% on the earnings report.

Now we want to see what to expect from the stock after its great quarter. Looking at its chart, it appears that D.R. Horton is ready to turn higher from here.

I like to look at something called the Relative Rotation Graph, or RRG. It combines the relative strength of a stock to the S&P 500 with momentum to create a unique view on the stock.

The RRG reveals a rotation from the stock leading the market, weakening as it loses momentum, and then lagging the market before improving as momentum turns around and the stock leads the market once again. A full rotation of the four areas is almost automatic. The question is if it will be enough to push the stock much higher.

Right now, D.R. Horton stock is still stuck in the lagging part of this rotation. In the coming days, we will likely see it shift to improving (blue) and eventually leading (green) the market once again.

Chart showing the share price performance of D.R. Horton, Inc. (DHI)
Optuma

Based on the key levels highlighted in red (resistance) and green (support), D.R. Horton is set to rally back up to that resistance level around $80 per share after the great quarter. Interest rates are remaining low, and consumers are gaining confidence after a volatile 2020. D.R. Horton stock could be setting up for a big run in 2021.

The Bottom Line

D.R. Horton stock is trying to rebound and turn higher after selling off for the past few weeks. The strong earnings report yesterday should help jumpstart the rally. With the stock sitting in the lagging quadrant of the RRG, we are looking for it to improve and lead the market as the share price marches back up to $80 and beyond.