Shares of Home Depot (HD) are under selling pressure Thursday. Prices look like they will make a new low close for the move down. Let's check out the indicators.
In our February 22 review of HD we wrote that "I expect to be making many trips to my local HD store for various things for my new home but I don't think my purchases will help the stock. Avoid the long side of HD as a better buying opportunity could be months away." Let's check again.
In this updated daily bar chart of HD, below, we can see that prices bounced to the upside in March but stopped short of the underside of the declining 50-day moving average line. The 50-day line also crossed below the slower-to-react 200-day moving average line for a bearish dead or death cross.
The On-Balance-Volume (OBV) line has been weak since the beginning of the year and tells us that sellers of HD have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator has been bearish since the middle of January.
In this weekly Japanese candlestick chart of HD, below, we see a bearish picture. Prices are in a downtrend as they trade lower below the declining 40-week moving average line. The weekly OBV line is in a decline and the MACD oscillator is bearish too.
In this daily Point and Figure chart of HD, below, we see a potential downside price target in the $265 area.
In this second Point and Figure chart of HD, below, we used weekly price data and a five box reversal filter. Here the software reveals a $182 price objective.
Bottom line strategy: Traders should continue to avoid the long side of HD. I anticipate further declines ahead and a still better buying opportunity.
