A weak sales performance in its recent quarter has Home Depot under pressure, but one technician says to buy here for its likely breakout.
“This weakness is occurring above support and within HD’s turnaround, and we therefore see an opportunity to buy shares,” Ari Wald, head of technical analysis at Oppenheimer, said in an email Tuesday.
The key to its strength lies in its technical performance, said Wald.
“The charts are bullish. They’re telling me to buy. They are signaling that the uptrend for Home Depot is continuing,” he told CNBC’s “Trading Nation” on Monday.
The home improvement retailer has outperformed the market in the past month after trailing the Dow Jones industrial average through the start of the year. It is the second-best Dow performer over the past 30 days.
A few technical levels suggest its recent performance should continue, said Wald.
“Home Depot’s 200-day moving average, still rising. This is indicative of a stock in an uptrend,” he said. Its stock is also “moving above $180. This is the first higher high for Home Depot since the correction started.”
Home Depot’s stock broke out above $180 in late April, a level it has been able to hold in intraday trading since.
“Add it all up, we have a pullback in an uptrend with an inflection. All signs pointing to a resumption of that uptrend for Home Depot,” said Wald.