Home Depot Inc. (HD) has been trading sideways since early August. Sideways trends, like all trends, do not last forever. HD is getting ready to report its latest quarterly numbers next week so let's see if we can glean any clues from the charts and indicators.
In the daily bar chart of HD, below, we can see that prices worked lower from August to early December and there has been some modest improvement since then. Prices are now back above the rising 50-day moving average line and the rising 200-day moving average line.
The daily On-Balance-Volume (OBV) line shows some slight improvement since the beginning of the year. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line but hardly showing a strong trend is underway.
In the weekly bar chart of HD, below, we see a more constructive picture. Prices are in a longer-term uptrend. We can see a couple of successful tests in January of the rising 40-week moving average line.
The weekly OBV line shows strength from late November and the MACD oscillator looks poised for an upside crossover and new outright buy signal.
In the daily Point and Figure chart of HD, below, the software is reading the X's and O's as bearish with a downside target of $253. On the upside, strength above $288 is likely to make the picture bullish.
Bottom-line strategy: 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.
