Will Home Depot (HD) go back over $40 this year?

Answer 1

Anybody's guess; depends on so many factors, including the direction of the entire stock market.

HD had a good run just in the last three days from $34 to $37, so it is entirely likely that it will reach $40.

It looks as though HD has made a good solid base between July and August from which to catapult back to new highs, if the stock market will cooperate. This base area, between $33 and $35 was developed over two months and should act as significant support. Should this area be breached, the price will probably go a lot lower.

If you were uncomfortable with your position during the two month basing period, then you would not be happy if it went lower. So use this Support area as a signal for you, and set a Protective Stop at $32.50 and let the market tell you what to do. It could still broaden the base and hold at $33, and rally from there. If it goes lower, you are automatically out of the market. Or you could sell half of your position if the top of the base area is breached at $35, and set a stop on the other half and free up some of your money while the base broadens.

For now, the new intermediate term trend is up. First major resistance to upward movement will be the $38-$39 area. Next resistance will be $41, then the high set in March at $44.

The name of the game is properly evaluating risk, and protecting your investment capital. This is what has been explained here, and you have exact numbers now for what you are risking.