Swing manager Arold calls Toll Brothers one of his best new ideas

Mike Arold, manager of the Technical Swing model, says Toll Brothers (TOL) is one of his best new ideas, and one of the only long plays in his trading portfolio, which is 79% in cash and taking on few new bets.

Arold bought shares of the homebuilder on May 21 at $26.04 a share; they now represent 6.1% of his portfolio.

Source: Stockcharts.com

There are a few things he says he likes about the stock:

• He says TOL has less exposure to international news headlines than the average stock. So he doesn’t think it will be influenced much by what is happening in Greece or the rest of Europe.
• There are still analyst with “Hold” or “Underperform” ratings on the stock; he thinks it could benefit from improving analyst sentiment.
• The stock is close to overtaking resistance at the 2008 highs. A high-volume breakout above $28 could set up further room to run to the upside.

One other interesting note about TOL is that the stock appears to be moving very much in line with lumber prices — another asset that tends to benefit from increased housing demand. Here is the latest lumber pricing data from the National Association of Homebuilders. You’ll notice that like TOL shares, lumber prices continue to rise from a trough in late 2011. The composite price of framing lumber is now at a two-year high, according to the NAHB data, above $300 for 1000 board feet.

And rising.