Sergey Kamenshikov, Ph.D.
IFC Markets
Downward correction
The November retail sales came out in the US on Friday. The monthly reading was below estimates at 0.2%. Home improvement goods sales contracted by 0.3%. Will the macroeconomic conditions contribute to the downward correction of retailer Home Depot stocks?
Lower home improvement goods sales are in line with the trend of contracted new and existing home sales. However, the sales are contracting just for a couple of months after steady growth. Mainly for this reason the Home Depot stocks rose 25% since the start of the year. In the same period Dow Jones Industrial Average, which includes those stocks, fell 3%.
HD
On the daily chart HD: D1 is correcting down within the uptrend. The Parabolic indicator and MACD have formed the sell signals. The Bollinger bands have widened significantly which may mean higher volatility. RSI has lest the overbought zone and is neutral. The bearish momentum may develop in case Home Depot breaks down through the correction channel and the last fractal low at 130. This level may serve the point of entry. The initial risk-limit may be placed above the Parabolic signal, the last fractal high and the historical high at 135.5. Having opened the pending order we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 135.5 without reaching the order at 130, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Sell
Sell stop below 130
Stop loss above 135.5
The November retail sales came out in the US on Friday. The monthly reading was below estimates at 0.2%. Home improvement goods sales contracted by 0.3%. Will the macroeconomic conditions contribute to the downward correction of retailer Home Depot stocks?
Lower home improvement goods sales are in line with the trend of contracted new and existing home sales. However, the sales are contracting just for a couple of months after steady growth. Mainly for this reason the Home Depot stocks rose 25% since the start of the year. In the same period Dow Jones Industrial Average, which includes those stocks, fell 3%.
HD
On the daily chart HD: D1 is correcting down within the uptrend. The Parabolic indicator and MACD have formed the sell signals. The Bollinger bands have widened significantly which may mean higher volatility. RSI has lest the overbought zone and is neutral. The bearish momentum may develop in case Home Depot breaks down through the correction channel and the last fractal low at 130. This level may serve the point of entry. The initial risk-limit may be placed above the Parabolic signal, the last fractal high and the historical high at 135.5. Having opened the pending order we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 135.5 without reaching the order at 130, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Position Sell
Sell stop below 130
Stop loss above 135.5
This overview has an informative character and is not financial advice or a recommendation. IFCMarkets. Corp. under any circumstances is not liable for any action taken by someone else after reading this article.
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