In our full edition of the "Morning Comment," we touched on the following subjects:
Here are the details of one of these bullet points:
HD’s recent action has been poor. A compelling break below its 200 DMA will be quite negative.
However, not all of the members of the ITB act well. One that concerns us is HD. We made a bullish short-term call on the stock in December. After a slight (further) decline, the stock bounced nicely off of its 200 DMA…rising more than 8% into the Christmas holiday. However, that rally lost some steam…and thus it has changed our thinking on the stock.
HD has still not retraced much of what it lost in November (after its most recent earnings report). This raises concerns in our minds that HD will not be able to hold its 200 DMA the next time it tests that line. Since the 200 DMA has provided VERY good support for the stock over the past nine months…and has been a key level in both directions for two year…any meaningful break below that line will be quite negative on a technical basis. In other words, the 200 DMA has provided both tough resistance and strong support over the past two years, but whenever it finally breaks above or below that line, the move tends to be a powerful one.
Right now, the 200 DMA is providing support…and it comes-in at the $214.25 level. We’d also note that the lows in December were $210. So if HD breaks below $210 in any significant manner…thus giving it an important “lower-low” (on top of breaking below its 200 DMA)…it’s going to raise a BIG red flag on the stock…….As always, we have to wait for a break below that key $210 level before we turn bearish on the stock, but the weak bounce in December (when the rest of the market was rallying strongly) has raised some serious concerns in our minds. Therefore, changed our stance on the stock…due to the change in recent action in the stock.
For the details on the rest of our comments this morning...and to get these kinds of comments on a daily basis, please click here to subscribe to "The Maley Report (TheMaleyReport.com).
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
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