4 Trade Ideas for Home Depot: Bonus Idea

Here is your Bonus Idea with links to the full Top Ten:

Home Depot, $HD, comes into the week rounding up out of a pullback to the 200 day SMA. It has a RSI climbing to the midline out of oversold territory with the MACD negative but crossing up. There is resistance at 395 and 403.25 then 412 and 420 before 424 and 432. Support lower is at 387.50 and 382 then 375. Short interest is low at 1.25. The stock pays a dividend with an annual yield of 2.35% and has traded ex-dividend since September 4th.

The company is expected to report earnings next on November 18th. The November options chain has biggest open interest build from 410 to a peak at 365 on the put side. The call side is biggest at 420 then 440. The December options chain has biggest open interest at 350 then at 400 and 380 on the put side and at 380 then 415 and 420 on the call side. Finally, the January chain has biggest open interest at 360 and 380 on the put side and at 380 below and 400 and 420 above on the call side.

Home Depot, Ticker: $HD

Trade Idea 1: Buy the stock on a move over 395 with a stop at 381.

Trade Idea 2: Buy the stock on a move over 395 and add a November 390/375 Put Spread ($5.40) while selling the November 420 Calls ($3.50).

Trade Idea 3: Buy the November/December 420 Call Calendar ($3.10) and sell the November 360 Put ($3.20).

Trade Idea 4: Buy the January 370/400/425 Call Spread Risk Reversal (5 cent credit).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with October Options Expiration in the rearview mirror saw equity markets hold up well into the start of earnings season despite rising volatility.

Elsewhere, look for Gold to continue the uptrend to new all-time highs while Crude Oil moves lower in a short term downtrend to the bottom of consolidation. The US Dollar Index continues to drift down in consolidation, while US Treasuries hold higher in their consolidation, continuing to tease of a reversal higher. The Shanghai Composite looks to continue the short term consolidation in the uptrend near 10 year highs while Emerging Markets also continue their uptrend to new 4 year highs.

The Volatility Index looks to continue to drift higher from low levels, checking the power of the equity markets move to the upside. The charts of the SPY, the IWM and the QQQ remain strong on the longer timeframe. On the shorter timeframe despite the IWM printing two new all-time highs, it and the SPY and QQQ remain vulnerable to more downside in the short term. Use this information as you prepare for the coming week and trad’em well.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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