What’s my favorite Dow holding? Home Depot ($HD). Here’s why. (July 14, 2020)
HD TSLA
Home Depot ( NYSE: HD ). The Homebuilders have actually been looking really constructive; Home Depot ( NYSE: HD ) would be one of the holdings in the XHB ( NYSEARCA: XHB ). This stock has been trading sideways in a narrowing range for a while here.
The way to really be trading this stock is, you look at the way the stock traded yesterday, it was kind of a fake-out like a lot of stocks did. Where the stock breaks out, runs all the way up to almost 260.00 and then comes back and closes at the low of the day. That’s a bad sign; you want to stay away from that stock. But then boom, today the stock traded down just a little bit more at the open like many stocks do and then just took off like a rocket ship and actually came very, very close to hitting 260.00.
So what do we do here? I think the stock is buyable right here. They report earnings in a month and so the way you would trade this stock is, give it room to do a complete reversal, hopefully, it won’t do that. The stock traded, essentially, in a 4.5 percent range, a little bit less than that. So if you are buying the stock at 260.00 you kind of have to put your stop clear down here below 250.00. If you even have it up here the challenge that you are going to run into is this, the stock pulls back, stops you out, and then by the way, all it’s done is a Phase 1, Phase 2, you get stopped out and then blast off, Phase 3 without you. So you have to give the stop a little more room to work.
One other thing, Tesla ( NASDAQ: TSLA ); don’t think this is a climax top. I sure wouldn’t buy it. I took my profits a couple of days ago and I am not interested in going back into it, you might be. If you are, use the 8-day moving average as a reference. If the stock starts trading below that then I think you are kind of overstaying your welcome a little bit.
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