Pair-Trade StrategiesBy Timothy Collins
05/15/09 10:34 a.m.
Home DepotBy Scott Rothbort
05/15/09 1:04 p.m. I have started a position in Home Depot (HD - Get Report). All of my channel checks, observations and discussions around the country indicate that we are in the beginning of a new wave of home improvements. Also the company has steadily reduced debt the past several quarters during the economic slide. The company reports Tuesday and I am willing to buy stock ahead of what could be a positive surprise for the quarter. Positions: Long HD
Home Depot TechnicalsBy Gary Morrow
05/15/09 3:13 p.m. Home Depot is nearing an important support area. Scott Rothbort posted his bullish take on HD earlier, so I thought I would add my technical take as well. I am also long the stock and have been patiently waiting for a healthy pullback to buy more. The stock has had a great run since completing a triple bottom just below $18 in early March. Volume in the early stages of the recovery was very robust, easily pushing the stock back above resistance at both its 50- and 200-day moving averages. The stock began to run out of steam in late April as volume declined while prices continued to rise. This month began with a series of loses -- seven out of the first eight days -- as a healthy pullback began. Volume continued to stay well below average during the downside action, indicating no rush for longs to dump stock. With today's 1% decline, again on very light volume, HD is very close to a key support area. The stock's upward-sloping 50-day moving average, which crossed through the 200-day last week, is just above $24. Just below $24 is a breakaway gap left behind in early April. This gap-higher action on April 2 was on the heaviest volume by far for the month. Slightly below this support is the 200-day moving average at $23.50 as well as the one-third retracement level of $23.40. A test of this support band, from $23.30 to $24, would offer a very-low-risk buying opportunity for Home Depot bulls. A close below $22 on accelerating volume would put the rally in trouble.