Stock of the day: Home Depot

In today’s Talk of the Day, let’s take another look at Home Depot, a stock that I previously analyzed on March 7th. Back then, I pointed out the formation of a large head-and-shoulders pattern, warning that a breakout of the green neckline would trigger a strong sell signal. As you can now see, that breakout has happened, and not only that, but the price also broke through the black uptrend line, confirming a full-fledged bearish signal.

Since then, Home Depot has been in freefall, declining sharply and continuously without any meaningful bullish correction. This confirms that the negative sentiment is strong, and traders who took the sell signal have already seen significant profits from this move.

Now, the question is: where does this drop end? Looking at the chart, the most logical target for this bearish wave is the orange area, which was a key resistance level in 2023 and later acted as support in 2024. Given the current strong selling pressure, it seems very likely that Home Depot will reach this level soon.

For now, the sentiment remains decisively bearish, and unless the stock bounces back above the broken trendline, there is little reason to expect an immediate reversal. Traders should monitor the orange support area closely, as it will determine whether Home Depot stabilizes or continues its downward slide.