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Home Depot Inc. - (HD) - November 13, 2023

It’s potentially a busy week for retailers. Home improvement retailer Home Depot (HD) kicks off earnings season for retailers tomorrow, US Retail Sales for October are due on Wednesday and Walmart (WMT) reports results on Thursday. Home Depot has been swinging back and forth between the red and yellow zones of the SIA S&P 100 Index Report for nearly two years, since exiting the green zone in January of 2022. Heading into these results, Home Depot’s relative strength has been weakening with the shares drifting down the rankings from the yellow zone back down into the Red Unfavored Zone. On Friday, HD finished in 63rd place, down 13 spots in the last month.

There are two retailers who are in the Green Favored Zone of the SIA S&P 100 Index report both with perfect 10 SMAX scores, Costco Wholesale (COST) and Walmart (WMT). Since March of 2022, Home Depot (HD) shares have been trending sideways in a horizontal channel between $270.00 and $330.00 with a slightly rising support line.

Back in the summer another breakout attempt failed at the top of the range and the shares tumbled back down through September and October. Two weeks ago, the shares bounced up off of trend support near $275.00 as part of an overall market rally. While the broader market continued to climb last week, Home Depot stalled out near the $290.00 level.

To signal the start of a meaningful upswing, the shares need to break through initial resistance in the $300.00 to $304.00 range between a round number and the 50-day moving average. Should that occur, next upside resistance appears at the channel top near $330.00. Initial support in a downturn appears near $275.00 followed by the summer 2022 lows near $260.00 and then the $250.00 round number.

Home Depot (HD) shares have been stuck in a sideways trading range between $255.00 and $335.00 since March of 2022. For the last two months, HD has been in a downswing within this range, that remains unbroken even through this month’s broad market bounce with the shares still on a bearish High Pole Warning signal.

To complete a three-box reversal, the shares need to close above $301.85 with next potential resistance at previous highs near $320.35 and $333.25. A close below $273.40 initial support would complete a pending bearish triple bottom pattern with next potential support at previous lows near $257.60. With a bearish SMAX score of 5, HD is exhibiting weakness across the asset classes.

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