Conclusion, Investment Implications, Strategy
The Home Depot, Inc. (HD) appears to be resuming its March advance following 5 weeks of sideways investor indecision. A sustained rise above the upper boundary of the indecision area, currently at $278.94, would help confirm this and target an additional 9% rise to $307.00 per share. This is an Asbury Momentum idea.
Analysis and Rationale
The Home Depot, Inc. (HD) operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, lawn and garden products, and décor products, as well as provide installation, home maintenance, and professional service programs to do-it-yourself and professional customers. The company also offers installation programs that include flooring, cabinets and cabinet makeovers, countertops, furnaces and central air systems, and windows; and professional installation in various categories sold through its stores and in-home sales programs, as well as acts as a general contractor to provide installation services to its do-it-for-me customers through third-party installers. In addition, it provides tool and equipment rental services. The company primarily serves homeowners; and professional renovators/remodelers, general contractors, handymen, property managers, building service contractors, and specialty tradesmen, such as electricians, plumbers, and painters. It also sells its products online. As of August 4, 2020, the company operated 2,293 retail stores in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, 10 Canadian provinces, and Mexico. The Home Depot, Inc. was founded in 1978 and is based in Atlanta, Georgia.
Chart 1 below plots HD daily since April, highlighting what appears to be the Oct 5th resumption of its larger March advance following about 5 weeks of sideways investor indecision. A sustained rise above the upper boundary of the indecision area, currently at $278.94, would help confirm this and target an additional 9% rise to $307.00 per share.
Chart 1
Table 1 below shows that considering the aforementioned upside target and a protective stop placed below the $274.10 area, a long entry price of $281.08 would provide a 1:3.7 risk/reward ratio (risking $1.00 to make $3.70) with an initial risk of 2.5%.
Table 1
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