Home Depot Inc. - (HD) - April 17, 2024

SIA Charts’ relative strength rankings help investors manage risk by identifying stocks and sectors which are underperforming relative to their peers and/or their benchmarks and should potentially be avoided. Staying away from stocks that are not attracting capital can help investors to avoid areas at higher risk of absolute declines and relative underperformance. Despite news of a positive US retail sales report on Monday, US retailers have been struggling on a relative basis for some time. Home Depot (HD) for example, failed in its latest attempt to return to the green zone in the SIA S&P 100 Index Report for the first time in over two years. The home improvement giant faltered just short of the yellow-green zone boundary and in recent weeks, it has been sinking back down toward the bottom of the Yellow Neutral Zone.

Currently in 50th place, down 16 spots over the last month, Home Depot is currently only three spots away from a return to the red zone for the first time since December. Over the latest month, HD shares have fallen by 10.3%, a much steeper falloff than the 0.9% dip made by the benchmark S&P 100 Index. Last November, Home Depot (HD) shares broke out of a $270.00 to $330.00 trading range that had prevailed for over a year and a half, kicking off a rally that drove the shares up toward $390.00. A spike up toward $400.00 failed to hold above that big round number and turned out to be a buying climax as the shares subsequently turned downward after that.

For the last month, HD shares have been under distribution, falling away from $400.00, snapping an uptrend line, taking out their 10-week moving average and then dropping under the $350.00 round number, which has flipped to become initial resistance.

Currently, HD is approaching potential support near $330.00, its previous breakout point where resistance has reversed polarity to become support for now. Should that hold, it would indicate the bulls are prepared to defend that level. Should it fail, however, it would signal the start of a potentially deeper downtrend with next potential support near the $300.00 round number.

A four-month advance in Home Depot (HD), which carried the shares from the $270s to the $390s has come to an abrupt end. After rising like an escalator, the shares have fallen like an elevator in recent weeks, dropping back into the $330s without even a 3-box bounce along the way.

The shares have completed a bearish Double Bottom breakdown to signal the start of a new downtrend, which would be confirmed by a close below the January low near $333.00, a move that would also complete a pending spread double bottom pattern. Should that occur, previous column highs and lows suggest potential downside support may appear near $326.40, then $307.50 and $295.50 on trend. Initial resistance on a rebound may emerge near $350.00 a round number that aligns with a 3-box reversal.

With a bearish SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 5 out of 10, HD is exhibiting short-term weakness against the asset classes.