We wouldn’t rush to buy the pullback in Home Depot (HD) just yet.

In fact, you’ll be safer if you wait for confirmation of potential trend change.

That’s because if the HD stock fails to hold $299.31, there’s no real support until $285.  Also, from my viewpoint, the HD stock could fall even more, as the company warns that consumers are just starting to pull back on spending.

Sure, the company beat earnings expectations with EPS of $3.30, beating estimates by two cents – which was great. Unfortunately, revenue of $35.8 billion was lower than expectations for $36 billion.  Comparable sales dropped 0.3%, which was below estimates for a gain of 0.3%.

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Worse, “The company guided for per-share earnings to decline by a mid-single-digit percentage in fiscal 2023, while analysts had expected earnings per share to be largely flat. Home Depot expects full-year sales growth to be flat, but Wall Street was looking for a slight uptick,” as noted by Barron’s. That coupled with higher inflation and rising interest rates, with an overvalued housing market could weigh on the stock even more.

Again, wait to see if support holds.  If not, HD could come down fast.


Ian Cooper