On Friday, HD traced out a rather volatile range. After opening the session slightly lower, the stock immediately ripped to the upside and reached a new 2017 high after slightly eclipsing the initial March peak. HD faded by the close and was lower again on Monday. While still inside a very tight range, the stock is looking quite vulnerable to a steep sell off. Patient investors may soon see lower entry opportunities for this A-rated stock.

Although Friday's range appears to include a bad data print when the stock surged to new March highs the resulting downside reversal was damaging. HD's powerful post-election rally, which lifted the stock nearly 25%, began to show signs of exhaustion earlier this month. As the stock returned to overbought territory, in its daily moving average convergence/divergence indicator, further upside has been limited. Coupled with the rather choppy action of late, HD is on the verge of a much needed pullback.

In the near term HD bulls should keep a close eye on the March lows. This level, just below $146.00, marks the lower band of a very solid support zone. Last week's low as well as the February high are also in this area. A clear break below $145.50 could spark a sell off leaving layers of supply behind in the process. A logical downside target for HD would then be the stock's upward sloping 50-day moving average. If the stock can regain its footing here patient investors should be prepared to take action.

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