Home Depot (HD) is the 'Stock of the Day' at Real Money on Tuesday. The retailer reported this morning a comparable sales increase in Q4 that beat consensus. Its GAAP EPS of $2.28 beat by $0.17. Let's check out the latest charts to see if they can resume their uptrend.
In this daily bar chart of HD, below, we can see that prices have been strong the past 12 months and only interrupted by three corrections. The most recent pullback was from November to December and ended with a successful test of the rising 200-day moving average line. Prices are above the rising 50-day moving average and the rising 200-day line.
The daily On-Balance-Volume (OBV) line has been rising the past year with only small, shallow dips when prices declined.
The Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts buy signal in December and an outright buy signal in January. The MACD oscillator had narrowed but renewed price strength could revive this indicator.
In this weekly bar chart of HD, below, we can see a bullish picture. Prices have been in an uptrend for the past three years and are above the rising 40-week moving average line.
The weekly OBV line shows a bullish trend from December 2018 and its recent new high confirms the price gains.
The MACD oscillator has turned to the upside in recent weeks for a fresh outright go long signal.
In this daily Point and Figure chart of HD, below, we can see a potential price target of $280 and that a trade at $248.22 will be a new high for the move up and should refresh the uptrend.
Bottom line strategy: Corrections in HD have not lasted long. Even if the broad market continues to flounder I would look for HD to show independent strength. Go long or add to longs when prices make a new high for the move up.
(Home Depot is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells HD? Learn more now.)
