Swing Trade Idea (HD) – December 15, 2022
Our bearish trade for Thursday, December 15h is The Home Depot, Inc. (HD). HD is part of the Consumer Discretionary Sector, which has performed at -2.84% over the last month, with HD overperforming relative to its sector at 8.64% over the same period. As this is a counter-trend trade, we expect HD to retrace lower.
HD had a strong rally into an area of resistance at $340 to form a triple top. It is now showing signs of exhaustion. As this is a counter-trend trade recommendation, we believe HD will retrace lower with the next support at $300, providing a good risk/reward bearish entry.
As a stop loss, if HD were to trade above $340 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We also will consider cutting losses on this options trade if the value of the vertical spread moves below $3.41.
