Home Depot (HD) Offering Possible 14.94% Return Over the Next 9 Calendar Days

Home Depot's most recent trend suggests a bearish bias. One trading opportunity on Home Depot is a Bear Call Spread using a strike $220.00 short call and a strike $225.00 long call offers a potential 14.94% return on risk over the next 9 calendar days. Maximum profit would be generated if the Bear Call Spread were to expire worthless, which would occur if the stock were below $220.00 by expiration. The full premium credit of $0.65 would be kept by the premium seller. The risk of $4.35 would be incurred if the stock rose above the $225.00 long call strike price.

The 5-day moving average is moving down which suggests that the short-term momentum for Home Depot is bearish and the probability of a decline in share price is higher if the stock starts trending.

The 20-day moving average is moving down which suggests that the medium-term momentum for Home Depot is bearish.

The RSI indicator is at 21.76 level which suggests that the stock is neither overbought nor oversold at this time.

To learn how to execute such a strategy while accounting for risk and reward in the context of smart portfolio management, and see how to trade live with a successful professional trader, view more here


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3 Blue-Chip Stocks to Short
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Wall Street is in Santa Claus rally mode at the end of the week. But will it be another and more bearish December to remember? One thing is for certain, blue-chip stocks 3M (NYSE:MMM), ExxonMobil (NYSE:XOM) and Home Depot (NYSE:HD) are showing technical signs that admired income streams will be trumped by capital gains for bearishly positioned investors.Let me explain.Wall Street is breathing much easier at the end of the trading week. Following a bearish opening act after POTUS took aim at China and the E.U. and a back-and-forth NATO summit provided market volatility but finished empty handed, investors are cheering Friday's jobs data. For its part, the Dow Industrials with its cadre of blue-chips is up roughly 1% and off fractionally for the five-day period.InvestorPlace – Stock Market News, Stock Advice & Trading TipsInvestors are also finding strength from a "calmer tone on trade" and perhaps motivated by seasonal bullish tendencies. The fact is it has been a solid 2019 and window dressing those gains could be in full-force this season. Still, there's always the chance the market could see a repeat performance more in keeping with last year's memorably bearish December. * 7 Hot Stocks for 2020's Big Trends At the end of the day, historical patterns such as a Santa Claus rally are nice to consider. But as we've seen, those leanings are far from ironclad opportunities. And with uncertainty surrounding Dec. 15 when a new round of tariffs on Chinese imports are set to begin, the chance for other bearish drivers to emerge or maybe reawakened concerns to rear their ugly head, it's a good time to keep some blue-chips on the radar for shorting. Blue-Chip Stocks to Short: 3M (MMM)Source: Charts by TradingView3M is the first of our stocks to short. As of this writing, this blue-chip stock is the Dow Industrial's biggest dog with its year-to-date loss of nearly 14%. Income-oriented investors might see this weakness coupled with a dividend of 3.45% as an opportunity. But I don't buy it. I see MMM's bearish patterns and overhead resistance as keeping shares in a shortable position.MMM Stock Strategy: Short this blue-chip stock if shares can break beneath the low of the November topping candle for a second time. One caveat is to make sure this price action is accompanied by a bearish stochastics crossover. It may mean shorting at a lower price in MMM stock, but it's worth the confirmation given what's been stated.Look to support near $133 – $140 for taking initial profits in 3M shares. Likewise, respect pattern resistance for exiting this blue-chip stock if necessary. ExxonMobil (XOM) Source: Charts by TradingViewExxonMobil is the next of our stocks to short. This blue-chip stock isn't in the same dog house as MMM, but XOM has been a definite laggard with its flat-line, year-to-date performance. And the price chart is telling me the worst is yet to come.Here, I'm focused on a broadening pattern top to complete in conjunction with a test of the 62% level. And as XOM stock wrestles with a breach of its long-term trendline and a bearish crossover of the weekly stochastics, there are good indications $60 – $62 will come into play. * 10 Stocks That Should Be Every Young Investor's First Choice XOM Stock Strategy: For this blue-chip stock I'd recommend shorting shares beneath this week's opening price of $68.50. From there, the aforementioned support area is where bearish traders should look to take profits. As important, since this is XOM stock's fourth stab at rejecting technical trendline support, there's not a whole lot of margin for error. I'd allow a bit of wiggle room, but $71 to cut down losses makes sense off and on the price chart. Home Depot (HD) Source: Charts by TradingViewHome Depot is the last of our blue-chip stocks to short. Technically, all stocks face corrective periods and bearish cycles at one time or another. And right now, HD stock's monthly chart supports the argument that this phase is just beginning.Shares of HD have confirmed November's bearish engulfing candlestick as part of a larger broadening top pattern. The price action also has the backing of a bearish stochastics crossover. And with this blue chip still near the pattern's signal price and support significantly lower near $140 or worse, HD is a stock to short today.HD Stock Strategy: To accompany a short in HD stock, I'd recommend using the pattern top to contain exposure to greater losses if required. This poses stock risk of around 11%. It's slightly more than I'd typically allow in a name like Home Depot. However, given the pattern's prospect's and skewed risk-to-reward in favor of bearish positioning, it makes a strong case for your consideration.Disclosure: Investment accounts under Christopher Tyler's management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Hot Stocks for 2020's Big Trends * 7 Lumbering Large-Cap Stocks to Avoid * 5 ETFs for Oodles of Monthly Dividends The post 3 Blue-Chip Stocks to Short appeared first on InvestorPlace.

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