Home Depot (HD) - Get Report has been the primary beneficiary of the home improvement boom over the last several years, and appliance sales are an important component of that success.


But while Home Depot is up 12% over the last 52 weeks, shares of Whirlpool (WHR) - Get Report are down 27%, with the appliance manufacturer underperforming by 53% in the period. That dynamic may be changing, with Whirlpool starting to make up ground and outperforming Home Depot by 8% year-to-date.

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The weekly chart of Whirlpool shows the decline off the 2015 high, back down to the area of the 50% Fibonacci retracement level of its 2012 and 2015 range. Currently, it is above the 38% retracement level and retesting the downtrend line drawn off the highs of the last year. The weekly relative strength index and the money flow index, a relative strength measure of money flow, are both crossing above their centerlines, reflecting positive momentum.

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A cup and handle pattern formed on the daily chart as the stock consolidated above the 50% retracement level. The $140 rim line and the 50-day moving average were broken this month, and the move continued on through the 38%, to just below the long-term downtrend line. The aroon indicator designed to identify early changes in trend has made a bullish green-over-red crossover, and daily moving average convergence/divergence, overlaid on a weekly histogram of the oscillator, is above its centerline on both timeframes. Accumulation/distribution is well above its 21-period signal average, and Chaikin money flow has crossed over its centerline. These money flow measures suggest the stock is under accumulation.

Whirlpool has rallied about 15% over the last two weeks and may be ready for a pause. A modest pullback would be a good risk/reward entry point, using a trailing percentage stop.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.