Home Depot (HD) has been in a correction mode for two to three months but now we are seeing technical evidence that the decline has run its course and traders can set their sights on new highs this year.
Let's check out the charts and indicators of this successful home improvement box store and Action Alerts PLUS holding.
In the daily bar chart of HD, below, we can see that prices tested the rising 200-day moving average line in December. Prices rebounded off of the 200-day line but have so far stopped short of the declining 50-day moving average line.
The daily trading volume has been heavy since the middle of November, which tells us that some traders and investors voted with their feet and dumped long positions. The movement of the On-Balance-Volume (OBV) line is interesting in that the line held steady in November and December and in the second half of December the OBV line climbed to a new high for the move up. The OBV line is telling us a bullish story for the new year.
The Moving Average Convergence Divergence (MACD) oscillator turned upwards last month for a cover shorts buy signal but an outright go long signal is not here yet.