Focus Remains With Home Improvement, Equipment Rentals and Temporary Housing Industry Groups
With Hurricane Florence due to come ashore over the next couple of days, we remain focused on home improvement retailers (HD) and (LOW). In addition, we are trading generator manufacturers (GNRC) and (BGG). Heavy equipment companies like United Rentals (URI) has seen bullish flow as well. Hotels and temporary housing will likely see more interest in the coming days, with several tropical depressions following Florence across the Atlantic.
Home Improvement – Home Depot and Lowes
Number one IBD ranked home improvement retailer Lowes broke out to fresh 52-week highs over a week ago. MACD suggests bulls are in control, so any flags or short-term consolidation will likely lead to a break higher. RSI is overbought, showing “muscle, so we would wait for new entries. We should tighten stops on existing positions.
Home Depot showed signs of short-term profit taking on Wednesday. After breaking above the 205.00 (+/-) pivot zone Tuesday last week, the stock gained an additional 3.5%.
We’ve traded around our original entry (188.00 +/-) for the past couple of months, so selling covered calls might be an option. IV Rank is around 20% but calls are pretty elevated at roughly $3.00 (+/-) for the September 210C.
Daily Bollinger Bands are turning inward suggesting a flag or consolidation is imminent. The caveat, of course, remains with momentum traders, who may decide to take the stock higher as more tropical depressions become hurricanes. This happened in the 2017 period shown below, where the stock broke out and rallied 50 points as the 2017 hurricane season completed.
Many other stocks in these hurricane-affected groups are ripe for continuation. We’ll cover some of them during the daily broadcast. Even (TPX) is getting some flow. Mattresses? Yup.
Futures are green on hopes of renewed China talks. As a side note, we keep thinking about Chinese stocks, and Chinese Nationals (billionaires and millionaires) whom we would imagine are very upset with a 50% cut in their net wealth. President Xi probably had an ear full.
Join us during the LIVESTREAM broadcast 9:20 AM ~ 4:15 PM EST for more.
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