Home Depot Stock Set to Wrap Up Worst Quarter In Years – Schaeffers Research (press release)

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Though today it’s up 1.6% at $177.61, Home Depot Inc (NYSE:HD) stock is on pace to close the first quarter down roughly 6.3% — its worst quarter since 2011. And like the Dow, it’s about to snap an impressive quarterly win streak, closing higher in each of the past six quarters. So, can HD stock get back to its winning ways, or is this the start of a longer-term downtrend? Let’s take a closer look at the data below to get a better picture. 

The first thing that jumps out on the blue chip’s chart is the 160-day moving average, equal to roughly one year’s worth of trading. This trendline provided strong chart support during HD’s August-September pullback, and seems to be serving as a technical floor once again. Data from Schaeffer’s Senior Quantitative Analyst Rocky White shows Home Depot has averaged a one-month gain of 1.8% after similar pullbacks during the past three years, and was positive 71% of the time.

It’s certainly also worth noting the Dow component has been one of the best stocks to own during April in recent years. On average, HD finished the month up 3.32%, and it’s only closed April in negative territory one time in 10 years.

Turning to the options pits, the security’s Schaeffer’s put/call open interest ratio (SOIR) of 0.91 suggests an almost equal amount of put and call open interest for options expiring within three months. However, a closer look shows a number of April puts saw heavy sell-to-open activity in recent weeks, with the 170 strike standing as the most popular overall during the past 10 days. By writing the puts to open, the traders expect Home Depot stock to stay north of $170 through April options expiration.

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