Like I've said before, I don't give a s*** what the fundamental say. People want this stock. It is breaking out of a bull flag today.
Unbelievable. I can take being wrong on calling CAKE's top, its a low volume manipulated pig that will go down eventually and I kept a tight stop.... and I can take playing AAPL's volatility, trade going green/red/green/red.... But I gotta admit... I was dead assed wrong on HD. Money aside, this one pisses me off. I'll be honest, I shorted some yesterday too at $129.50...and didn't cover this morning. This one I'll eat crow. Huge crow. Jurassic f'n Park crow.
Well,... since you asked... This is a crash course in HD Chart TA. Daily chart shows a recent down trend in HD with a recent break above resistance (red line). Notice that resistance was broken with a relatively steep uptrend support line (green line). Once resistance was broken the price slid back down to test the support (red line), .....resistance becomes support when it is broken through like a new floor in a high rise building. Break through the ceiling to the next floor and the floor now becomes your new support. This new support was tested. Also, notice the rising uptrend (green line) support was converging with the down sloping support line (red line). This becomes even more powerful support where buyers would likely support the price. Lastly, notice the 2 down sloping blue lines mark a recent retracement of the new uptrend. This looks like a flag on a flag pole with the pole being the recent up trend in price since early November. This is a BULL FLAG. You have all 3 things saying this is support and a rest before taking off again. Not to mention the upward slope of tyebMACD Histogram showing momentum picking UP not slowing. You also have a MACD line that is well above the ZERO line which is bullish and shows an uptrend has started. Then, you also have the RISING EMA 39 and the the price getting to the EMA 20 (support bounces frequently occur on Moving average lines) before it bounces. Finally on the Weekly chart you see a MACD line below ZERO LINE which is NOT necessarily bullish but it is RISING and about to pierce the ZERO line....(like a needle about to pop a balloon, with the ZERO line being the ballon). For this purpose we will just say that MACD above ZERO is uptrend and below is downtrend.....it's not quite that simple but let's use that for now. Also notice that the WEEKLY EMA 39 is RISING and the EMA 20 also almost exactly coincides with the DAILY EMA 20.....MORE evidence of a likely bounce area. Lastly, the recent downtrend in HD price was just another BULL FLAG in a longer term UPTREND. You had MULTIPLE timeframes telling you this was the wrong direction to trade HD.
Awesome post dude. Thank you for taking your time to do that. The only thing I can ask (or say) is what if the markets had completely sold off today? It would be a different story right? So what I can take away from this is that T/A works... but only when the overall markets work in the anticipated direction. I can live with that.
Just to finish out the lesson,... The 60 min chart shows a rising wedge (Blue triangle lines) which is a BULLISH formation showing buying pressure underneath the stock with a RISING MACD line divergence. Divergence means the MACD is rising while price is flattening or falling. Again, that shows pressure underneath building up to pop UP through the resistance of the wedge formation. Again, a RISING EMA 39 on the Hourly chart. Finaliy, the Stochastic which is a fast oscillator shows that it is below 20 right before the pop up which indicated an OVERSOLD condition. Price had no where to go but UP based on this analysis.... Sorry, dude. You guys still think TA is Bullshit?
Its definitely not BS.... But I'd rather see it work in a down market day before I throw the baby out with the bathwater.
There would be some indication on the charts that the markets would sell off. There is very little indicating that. There will ALWAYS be surprises and ALWAYS times that you get conflicting information from one timeframe to another. But if the market sold off then this would look different but just like those formations I drew I would have expected the sell off to stop at support and used it as a BUYING opportunity not to short.
Hmmmm. OK. I got blindsided by the broader markets. I was NOT expecting this run today. Everything is up. I still say HD is a good short. In the long term fundys win. You can't debate that. That being said,.... I'll be riding the Greyhound to Baron's party. You the man EG... thnx.
It DID work on down days. Look at the SPY and notice that 11-30 to 12-2 the market went down a bit and found support around EMA 20 and had a BULL FLAG forming JUST LIKE HOME DEPOT? That was the time to buy. I have said several times market may retrace a bit and looking to buy dips. Look at the charts of SPY and many other stocks see similar formations and patterns. That's why I bought MU, MOS as mentioned in other threads. Not because I even know WTF these companies balance sheets look like. Who gives a shit? I only care what other people think about these. They could be selling air for all I care.