Home Depot's Charts Are in Need of Renovations
As this homebuilder takes a hit on earnings, let's check its technical outlook.
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Home Depot HD on Tuesday reported adjusted earnings per share of $4.67, which beat estimates by $0.12 and revenue of $43.2 billion, which beat by $490 million. Home Depot cut fiscal 2024 comp sales and margin outlook.
The share price is trading lower in the premarket.
Let's check out the charts and indicators. Measure twice....
In this daily bar chart of HD, below, I can imagine prices trading in the $328 area. If prices open trading around $328 it will mean that prices are below the 50-day and 200-day moving average lines and testing/breaking the early July price low.
The daily On-Balance-Volume (OBV) line has been stalled the past four weeks ahead of today's earnings release. The OBV line is likely to turn lower today. The Moving Average Convergence Divergence (MACD) oscillator is only slightly above the zero-line.
In this weekly Japanese candlestick chart of HD, below, I can't ignore the upper shadows on this chart in July as traders rejected the highs ahead of the earnings report.
Prices are trading below the 40-week moving average line but this will not appear until this chart updates on Friday. The weekly OBV line has weakened since late August and tells me that sellers of HD have been more aggressive than buyers for the past year. The MACD oscillator is only slightly above the zero-line.
In this daily Point and Figure chart of HD, below, I can see that the software shows us a potential downside price target in the $313 area.
In this weekly Point and Figure chart of HD, below, I can see an upside price target but if HD declines to $313 as the daily chart above suggests it will turn this weekly chart bearish.
Bottom line strategy: In my March 19 update on HD I recommended caution and a $359 sell stop. Traders should have been on the sidelines of HD for a while now. Continue to stand aside.
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