Shares had traded as low as $37.23, before rebounding on the day. Uninspiring second-quarter results were the culprit, although management's outlook certainly didn't help matters.
Earnings of $1.08 per share were in-line with expectations, while revenue of $1.62 billion missed analysts' expectations by $10 million and grew just 1.3% year-over-year.
It doesn't help that management now expects earnings between $3.45 and $3.60 per share, vs. a prior range of $3.52 to $3.70 per share and consensus expectations of $3.58 per share. Management also cut its revenue outlook to a range of $6.1 billion to $6.2 billion vs. a prior range of $6.25 billion to $6.35 billion and a consensus expectation of $6.26 billion.
A lackluster quarter is one thing, but cutting full-year guidance is far more disappointing. It's got some investors wondering if a test of the 52-week lows are on the table, currently down at $35.35.
Let's look at the charts.
Trading HD Supply Stock
A look at the weekly chart above reveals a few key technical support levels in HD Supply stock.
First, the 200-week moving average has played a key role in buoying HDS stock since 2017. Before that came along, though, a shallow-rising uptrend support level (blue line) has been in play, bouncing shares higher over the years.
These levels came into play near $37.50, and helped provide the bounce for HDS stock on Tuesday. The worry now is, what happens if these levels give way?
Should uptrend support and the 200-week moving average fail as support, HD Supply stock would be expected to test down into the $36 to $37 area. This zone has been notable since 2016, although losing key support to get there would be very discouraging.
Just below that is the 52-week low of $35.35 and beneath that, shares could fall into no man's land.
On the upside, the setup is simple. Bulls first need the 200-week moving average to hold as support. If it does, see if HDS stock can reclaim the 50-week moving average, which has been stiff resistance since June.
In other words, to hit new lows, HD Supply stock has to fall through a number of support zones. If it does, that's a very bearish setup. However, if it holds, perhaps it can snap out of its recent funk -- although the latest quarterly results aren't likely to help.