How the Home Depot stock can increase 15% after earnings are exceeded

How the Home Depot stock can increase 15% after earnings are exceeded ...

Retail was at some point one of the few bright spots on the market. Top-performers in the group, like Target (TGT) - Get Target Corporation Reportand Costco (COST) - Get Costco Wholesale Corporation Report, were quite operating, while others, like Home Depot (HD) - Get Home Depot, Inc. Reportwere attempting to gain momentum.

The bulls believed they might have found it on Tuesday morning: Home Depot climbed 5% at its highs following reporting earnings before the open. Even worse, the stock was threatening to cross through a major technical field.

The stock plummeted, gave up its gains on the day, and fell into the red. At last check it was a bit into the green.

Despite an easy earnings and revenue gain, as well as same-store sales and comp-store sales results that exceeded analysts expectations, management even provided a strong full-year forecast.

What''s the price of sapping the stock energy?

Get Walmart Inc. Report, which is down 10% due to its disappointing quarterly results. Perhaps its just the stocks behavior as its trapped below resistance.

While there''s hope that the Home Depot stock might help bring the recovery back, we cant ignore the charts.

Trading Home Depot

Home Depot stock is shown in a weekly chart.

TrendSpider.com has provided a chart.

For a moment, today''s rally sounded great.

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Home Depot''s stock was generating over $300, as well as the 10-day and 21-day moving averages. This time, the company has even overcome the most difficult hurdle, with 50-day and 10-week moving averages.

All of these difficulties would have been dealt with as a result of a substantial achievement and a potentially significant shift in momentum.

Non only would technicals have cleared the way for significantly higher prices, but also the fundamentals would be working in tandem.

As a result of a better-than-expected quarter and a strong outlook, Home Depot is in charge of making its strongest quarter of the year, with some improvement.

Not all hope is lost, but it suffered a difficult blow as the present situation faded.

I''d like to see it close above $300. That increases the odds that it will burst back over today''s high. If it can clear Tuesday''s high, then Home Depot stock may clear a lot of technical resistance.

In such a scenario, it may open the way up to the $340 to $350 area.

If momentum returns, Home Depot''s stock was trading at $420 not that long ago. There''s also a certain amount of bullish divergence to monitor on the Relative Strength Index reading at the bottom of the chart.

Keep an eye on this month low near $280. If we fail to close above the 10-day mark, this level might remain vulnerable. Below $280, which opens the way down to the rising 200-week moving average.

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