NEW YORK (Real Money) -- Retail has been all over the place, but my feeling is it has been much more negative than positive. We're seeing some of that negativity spill over into Home Depot (HD) despite some pretty good results. The stock has slipped into the red as I type this, although just by a handful of loose change.
While the stock has made a steady move higher from last September through February, bulls have taken a bit of a break from the buying. After the dust settles today, though, the charts seem to be hinting that we could see the buyers come back into play; however, we can't drift too much lower from here.
Home Depot has already broken out higher on the daily report into the number. Over the last 10 days, we've witnessed the eight-day simple moving average push over the 21-day SMA, while the slower MACD, medium-term 13 period RSI and longer-term 21 period RSI have all crossed in bullish fashion. The two RSIs have been a big key. The 13 period RSI has been a yellow flag for bulls any time it is under 50, while the 20 period RSI (top indicator on the chart) has been a huge red flag while under 50. We've erased both those conditions, which had HD teetering on the edge to begin May.
Combine these with the wedge breakout higher and HD should have a good opportunity to run into the $120s through the summer. There is support that looks to be converging around $111. I absolutely don't want to see the price breach that area by more than a dollar. As a high-dollar stock, I will give a little wiggle room here and not tie myself right to $111, but I'm not giving too much more room on the long side to maintain a bullish stance.