Home Depot Hold Steady Despite Market Slide

Published on Tuesday, 14 February 2012 16:39 Written by David Becker

New York, February 14^th (TradersHuddle.com) – Home Depot (NYSE: HD) is scheduled to release earnings before the opening bell on Monday February 21, 2012.  Expectations are that the giant retailer will post earnings of 42 cents per share during the quarter on 15.46 billion in revenue.

The stock price has rallied more than 9% in 2012, helping the major averages mark up solid gains.  Since the low point hit at the beginning of October 2011, HD has rallied more than 48%, which is one of the largest moves in the Dow.  Resistance on the large cap stock is seen near the recent highs at 46.  Support on HD is seen near the 20-day moving average near 44.95.  A break below this level would likely lead to target support near the 50-day moving average at 42.85. 

The trend has been very smooth, which has allowed the relative strength index to remain under the overbought level of 70 for the majority of the run.  Only one since October has the daily RSI moved above 70.  On a weekly basis, the RSI settled at 76, which reflects an overbought market. In early November, the 50-day moving average crossed above the 200-day moving average (the golden cross), which is generally considered a sign that the stock is in the middle of a longer-term trend.

The MACD has diverged and is showing signs of negative momentum.  The spread (12-day moving average minus the 26-day moving average) has crossed below the 9-day moving average of the spread in late January, even as the price of the stock continued to rise.  The index level remains below zero, which should be a warning sign for bulls of HD.