HD Price Plunges After First Quarter Report

Home Depot is the world’s largest home improvement retailer with more than 2300 stores across North America. It engages in the sale of building materials and home improvement products.

Recently, HD stock did a breakout to downside shattering the support level of $309.50 level.

The price fell to form support at the $280 level losing approximately 10% value of shares. Since then, HD price is stuck in a consolidation zone ranging between $280 and $302.

HD is currently trading near the demand zone and the current candle did break the support of $280 but bulls managed to push price back into the consolidation.

Home Depot Quarter 1 Report Released

Home Depot released its Quarterly earning report on May 17, 2023. HD reported an EPS of $3.82, topping the consensus expectation of $3.80, a surprise of $0.02 (0.47%). Home Depot posted the worst revenue miss in 20 years as the consensus expected it to be $38.91 Billion, and it turned out to be $37.26 Billion, which lowered its forecast for 2023.

Home Depot stated that due to cold weather and falling lumber prices hurt the sales of the first quarter. The retailer now has sales and comparable sales to decline by 2% and 5% in the current fiscal year.

Net income came down from $4.23 Billion to $3.87 Billion falling 8.5% as seen in the first quarter of 2022. Rising interest rates can help in dampening the appetite of prospective home buyers and cooling off home values. The average ticket size still remains roughly the same as last year at $91 roughly. The company shares closed 2% lower on Tuesday after the news.

WIll HD price head down to $268 support level?

Chaikin Money Flow score is -0.01 as the price reaches the demand zone. HD price closed below all the major EMAs indicating bearish sentiment hovering over Home Depot stock price after the release of the quarterly report.

Bulls need to defend the current support to protect the price from falling to the $268 level causing a downfall of approximately 4% in the price. RSI has crossed the 40 mark and is currently at 39.42, suggesting a possibility of breakout to the downside.

HD price has reached the lower band of Bollinger and is showing signs of increasing bullish sentiment. Most of the outcome depends on the participation of bulls in the market, as Home Depot missing the consensus expectation of revenue has generated a negative sentiment in the market.

Conclusion:

The market structure and price of Home Depot seem to be indecisive at the current moment and traders should wait for confirmation before looking for a bid. The technical parameters show that there is a chance of breakout if bulls cannot defend the recent support.

Technical levels:

Major support: $280 and $268

Major resistance: $302 and $309.50

Disclaimer

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