As the COVID Delta variant continues to keep America on the run, Jim Cramer told his Mad Money viewers Tuesday it's time to dust off the Spring 2020 playbook and start investing in the pseudo-lockdown stocks.
What's a pseudo-lockdown stock? It's the type of company that flourishes in a "worse before it gets better" economy.
In retail, that means investing in WATCH, Cramer's acronym for Walmart (WMT) , Amazon (AMZN) , Target (TGT) , Costco (COST) and Home Depot (HD) . All of these retailers have navigated the pandemic with flying colors and are the ones consumers trust most.
Let's look closer at Home Depot.
In this daily bar chart of HD, below, we can see that prices made a high in May that was followed by a correction into June. Prices have crawled higher but are still short of their May zenith. Prices are above the slightly rising 50-day moving average line. The trading volume has been decreasing the past three months except for a couple of spikes in June.
The On-Balance-Volume (OBV) line shows a peak in early May followed by a decline and then a sideways or neutral move. No leadership shown here.
The Moving Average Convergence Divergence (MACD) oscillator is very narrow and could quickly turn up or down with the price action.
In this weekly Japanese candlestick chart of HD, below, we can see two small real bodies which tells us that there is a balance between buyers and sellers of HD. This balance can mark a top if we get a bearish candle this week for confirmation.
The 40-week moving average line is still pointed up but the OBV line is pointed down. The MACD oscillator is ready for a turn lower.
In this daily Point and Figure chart of HD, below, we can see an upside price target of $376, but we can also see that a trade at $312.05 will weaken the picture.
Bottom line strategy: In our February 23 review of HD, we wrote that "Two of the three charts above are looking positive. Aggressive could probe the long side of HD ahead of earnings but keep positions small. Risk $269." Traders would have been stopped out on the decline into early March. With HD now showing signs of weakness I would recommend a neutral stance on HD. We may get a better buying opportunity later in the third quarter.