Home Depot Flirts With a 52-Week Low With Nothing to Build On

In the daily bar chart of HD, below, we can see a chart pattern that is looking all too familiar. The shares declined to a low in June followed by a rally into the middle of August with a subsequent retest of the June lows. HD is trading below the declining 50-day moving average line and below the 200-day line.

The On-Balance-Volume (OBV) line has been relatively weak the past 12 months. A new low in the OBV line will confirm the price weakness. The Moving Average Convergence Divergence (MACD) oscillator is bearish and crossing to the downside for a fresh sell signal. 

In the weekly Japanese candlestick chart of HD, below, we can see two upper shadows in October telling us that traders are rejecting the highs of the week. This reinforces the likelihood of further declines. Trading volume has been heavier since February telling us that traders are voting with their feet.

The weekly OBV line has been weak since December. The MACD oscillator is bearish. 

 

In this daily Point and Figure chart of HD, below, we can see a potential downside price target in the $245 area. 

 

In this weekly Point and Figure chart of HD, below, we see a downside price target of $246. 

 

Bottom-line strategy: A further decline in the shares of HD will weigh on the DJIA. Avoid the long side of HD as long as the charts and indicators look weak.