HD is trading below the channel established since 2011. Also the trendline is broken. It may be forming head and shoulder top with neckline support at 73. It is a short candidate below 73.
HD only bounced briefly to 76 earlier this week and I posted on the previous HD chart that I would sell a gap over 76 or 77-78, HD didn't reach my levels. I am willing to get back in on the short side here with a target of 70-68 as labeled on the chart.
The home building stocks have continued lower and HD failed to rally despite raising guidance and beating...
I think this is a good time to take this trade off. VIX has popped up a fair amount. We have had a nice post-options-expiration selloff also. Earnings are also behind us and this is the most oversold the stock has been in over a year (using a 6-month rate of change as the measuring stick). I'll hope I don't miss out on the rest of the decline, but the risk-reward...
Home Depot is at nose-bleed levels from my perspective.
The rally is nearly linear for over a year (note the tight regression and the 60% rise in price) and you can clearly see the bulls have had their party for a long time now.
It is astounding how HD has refused to go down along with the other homebuilding stocks and lumber prices and the financial engineering...
