Home Depot, Inc. (HD) is trading down about 2% Tuesday following weaker-than-expected earnings and a slight cut in guidance. The big concern was some softness in same-store sales, but management gave the typical, upbeat assessment about company progress and assured investors it can hit a 5% growth target. A $15 billion buyback was announced and the dividend increased, which will keep a bid under the stock.
This wasn't a terrible report, but Home Depot trades with a trailing P/E of 19 and is expected to report single-digit earnings-per-share growth in the next two fiscal years. That isn't particularly cheap, but it is it a safe play unless the economy really starts to slow.
Technically, there isn't anything very compelling about the chart right now. The stock is back under its 200-day simple moving average at $189.25, and there is formidable overhead from last fall. There is likely to be some good support around $180, but there is no big rush to own this one.
Many other stocks are in similar position right now after a big run, and some pullbacks to support is what is needed.
The Jerome Powell testimony is helping to keep the indices around flat, but there is mixed action in stocks today. I am battling a desire to put on a big index short. There is something very appealing about catching a downside move after the market has run straight up for so long, but that is driven more by emotion than logic. I want to give in to the emotion, but I have to force myself to stay patient and wait for the right conditions first.
One of the biggest battles in trading is recognizing when you are driven more by emotions than logic. You have to be very self-aware in order to be effective.
Monday, I mentioned Intelsat (I) as a favorite name. After the close, it received an "outperform" rating and a $50 target from Evercore ISI. The stock gapped up after the close on that report, but has been sold aggressively so far Tuesday. I am using the weakness to build a position and feel more optimistic now after the confirmation from Evercore.