The Home Depot is a home improvement retailer. Co. provides its customers an assortment of building materials, home improvement products, lawn and garden products, and decor products and provides a number of services, including home improvement installation services and tool and equipment rental. Co. also maintains a network of distribution and fulfillment centers, as well as a number of e-commerce websites. Co. provides a number of services for its customers, including installation services for its Do-It-Yourself and Do-It-For-Me customers. Co. also provides tool and equipment rentals at several locations across the U.S. and Canada.
When researching a stock like Home Depot, many investors are the most familiar with Fundamental Analysis — looking at a company's balance sheet, earnings, revenues, and what's happening in that company's underlying business. Investors who use Fundamental Analysis to identify good stocks to buy or sell can also benefit from HD Technical Analysis to help find a good entry or exit point. Technical Analysis is blind to the fundamentals and looks only at the trading data for HD stock — the real life supply and demand for the stock over time — and examines that data in different ways. One of those ways is to calculate a Simpe Moving Average ("SMA") by looking back a certain number of days. One of the most popular "longer look-backs" is the HD 200 day moving average ("HD 200 DMA"), while one of the most popular "shorter look-backs" is the HD 50 day moving average ("HD 50 DMA"). A chart showing both of these popular moving averages is shown on this page for Home Depot. Comparing two moving averages against each other can be a useful visualization tool: by calculating the difference between the HD 200 DMA and the HD 50 DMA, we get a moving average convergence divergence indicator ("HD MACD"). The HD MACD chart, in conjunction with the chart of the moving averages, basically helps in visualizing how the moving averages are showing convergence (moving closer together), or divergence (moving farther apart). |
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Video: Technical Analysis