Chart of the Day: This New Bullpen Entrant Is in Need of Repair
The stock was hammered following cool earnings guidance as a competitor passes them up.
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The cycle for retailers can be quite long. That usually means a nice smooth time of prosperity, but it can also mean very long times of trouble.
Enter Home Depot (HD) , which we recently added to our Bullpen, so we can further examine their troubles and wait for a spot to add (perhaps) to TheStreet Pro Portfolio. This could be one of those extended times when Home Depot underperforms the market, but out further in time might be right for our first entry point.
The HD chart is weak and shows the stock is quite bearish and vulnerable here. Even after selling down significantly before earnings hit, HD fell sharply and followed through on Wednesday. That is bad news for the bulls, now being set up as a "sell any rally in the stock" situation.
The ADX is up sharply, telling us the trend (which in this case is bearish) is very strong. Stochastics are way down and the money flow has seen better days. Moving average convergence divergence (MACD) is on a sell signal and of course the purple candles mean strong bearish on the GoNoGo composite of indicators.
This is not a buy here. At a minimum, HD should build a nice long base and start a run of higher highs, higher lows. That will take some time, so we'll wait for it.
Home Depot is in Bullpen and not in TheStreet Pro Portfolio.
At the time of publication, TheStreet Pro Portfolio had no positions in any securities mentioned.
