HD Home Depot Daily and Weekly Charts; Positive Divergence in Play

Everybody and his bro rode the big Home Depot wave the last few years and as usual, many did not exit on the negative divergence top. Too bad for them. HD plummets from 415 at the start of the year to 302 a -27% crash. Clean-up is needed in the plumbing aisle.

There are probably many of these same folks trying to figure out where the bottom is at. You don't know. That is why you are here. HD's daily chart is on the launch pad set up with positive divergence. However, the MACD on the weekly chart remains weak and bleak.

The daily chart shows that a bounce for beat-down Home Depot is about to begin on the daily basis. This is also bolstered by the possie d on the weekly (green lines). However, it is not set up for a rally on the weekly basis as yet. The MACD will need to go possie d. It may get crazy in the near-term because many traders are going to think the bottom is in and buy with both hands. HD makes big bucks in the spring season with flowers and such. 

So the rally on the daily may spurt wildly higher. It may stutter-step for a couple days early next week to set the bottom on the daily. The rally in the daily time frame will last a few days or week or two but that is it. If you jump in long now, be nimble. You only want to ride it higher for a few days or week or three. You will have to see how the price movement is and if the daily sets up with neggie d after the rally.

HD will then roll back over to the downside to honor the MACD on the weekly. HD will come the whole way back down for a matching of lower low. The RSI is not oversold as yet on the weekly so that may be on tap a couple three weeks out. When price makes the matching low, perhaps going into the end of this month, the MACD will likely turn possie d joining the other chart indicators and forecast a multi-week rally.

So if you are a nimble trader, you can play long now but do not marry the position. Take the dough as it rallies and do not get greedy. Then wait for the price to drop again and when it sets up with universal possie d on the weekly, that is the time to buy and hold for several weeks (if an investor rather than a down and dirty stock trader).

Keystone does not hold any position in HD long or short right now but will go long now probably buying today and then early next week. The 2-hour chart is set up with possie d so she's ready to fly. It will be fun to watch because all the idiots will run into it proclaiming that the bottom is in. As they hold their positions, they will ride it back down as April plays out.

So choose your poison. The play is long now but only ride it a few days or week or two depending on how much everyone becomes bulled-up. The longer multi-week rally for HD will begin in a couple weeks or so as explained. If you want to play it safe and are adverse to risk, simply wait for the MACD to go possie d on the weekly and buy then for the multi-week rally. Put HD on your long watch list. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.