Home Depot (HD) has become very oversold on a short-term basis. A 9% decline in less than a week has taken its RSI chart on HD to an oversold level...at a time that it is also testing its trend-line from last December. So it should bounce off of that trend-line and see a short-term bounce.
On top of this, other assets...whose correlation with HD...are testing (or very close to testing) very important resistance levels. Therefore, if these other assets (LOW, lumber and the ITB home construction ETF) can indeed break meaningfully above these key resistance levels, HD should follow them higher on a longer-term basis as well.
To see the charts we're talking about...and thus see the levels that, if broken, will be positive for several different assets (including HD), please click here to subscribe to "The Maley Report" (TheMaleyReport.com).
Matthew J. Maley
Chief Market Strategist
Miller Tabak + Co., LLC
Founder, The Maley Report
275 Grove St. Suite 2-400
Newton, MA 02466
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