4 Trade Ideas for Home Depot: Bonus Idea

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

Home Depot, $HD, made a top in February and then drifted down to its 200 day SMA. It bounced there and climbed back up, but stopped short of the prior high. The price reversed and fell to a low in March more than 40% lower. After only a few days of consolidation it started back higher. Last week it it hit a 78.6% retracement of the drop at the 200 day SMA and paused.

The RSI rose into the bullish zone with the MACD positive and moving higher. There is resistance at 224 and 228.50 then 234 and 241 before 247. Support lower comes at 215 and 210 then 201. Short interest is low under 1%. The stock pays a dividend with an annual yield of 2.75%. The company is expected to report earnings next on May 19th.

The May options chain shows the biggest open interest at the 200 strike on the put side with size at 220 and 205 as well. On the call side it is biggest at 225 and has very high levels at 220 and 200. The May 22 Expiry, covering the earnings report, is much lighter, but implies an $18 move in the stock price by expiry. The June options have large open interest at 190 and 200 on the put side with the biggest at 220 on the call side.

Home Depot, Ticker: $HD

Trade Idea 1: Buy the stock on a move over 224 with a stop at 214.

Trade Idea 2: Buy the stock on a move over 224 and add a May 22 Expiry 217.50/212.50 Put Spread ($3.55) while selling the June 240 Call ($3.50).

Trade Idea 3: Buy the May/June 225 Call Calendar ($6.40) and sell the May 22 Expiry 200 Put ($2.95).

Trade Idea 4: Buy the June 190/225/235 Call Spread Risk Reversal for free.

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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 the books closed on the first 4 months of the year sees equity markets seeming in need of some rest as they start May.

Elsewhere look for Gold to consolidate in the uptrend while Crude Oil continues to move higher. The US Dollar Index continues in consolidation while US Treasuries consolidate in their uptrend. The Shanghai Composite looks to continue consolidation in a shortened week while Emerging Markets are poised for a possible reversal lower.

The Volatility Index looks to remain elevated and not so ready to move lower putting a speed bump in the path for equity markets. Their charts show consolidation in the shorter timeframe, holding in bullish ranges, but all have printed possible reversal candles on the longer timeframe. The QQQ continues to look the strongest with the SPY next and the IWM bringing up the rear. 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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