Potential Trade Opportunities with Home Depot (HD)

The Home Depot, Inc. (HD) operates as a home improvement retailer.

Its stores sell building materials, home improvement products, and lawn and garden products, as well as provide installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me, and professional customers.

The company’s installation programs include products, such as carpeting, flooring, cabinets, countertops, and water heaters.

It serves homeowners, professional remodelers, general contractors, repairmen, small business owners, and tradesmen.

As of September 26, 2013, the company operated 2,258 retail stores in 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, and Mexico. The Home Depot, Inc. was founded in 1978 and is based in Atlanta, Georgia.

To review HD’ stock, please take a look at the 1-year chart of The Home Depot, Inc. (HD) below with my added notations:


HD has been trading mostly sideways for the last 5 to 6 months. Over that period of time, the stock has formed a resistance area around $80 (red), In addition, HD has created a strong level of support at $72 (green). At some point the stock will have to break one of those two levels.

The Tale of the Tape: HD has identifiable levels of support and resistance. The possible long positions on the stock would be either on a pullback to $72, or on a breakout above $80. The ideal short opportunities would be on a break below $72.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

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Source: Today’s Big Stock