Technical analysis

Two stocks to watch: Week 7, 2024

By Antreas Themistokleous

13 February 2024

3188 two stocks week7

Two retail giants are dominating in week 7. Let's see why Home Depot and Walmart stocks are on traders' watchlists.

Home Depot, Inc.

Home Depot, Inc. (HD) share price has seen spectacular steady growth in the latest quarter, managing to rise by around 25%. The company's earnings report for the fiscal quarter ending January 2024 is expected to be released on Tuesday, 20 February, before the market opens. The consensus EPS is $2.73 (USD) against $3.30 for the same quarter last year.

The company recovered from the losses incurred in the previous quarter and is not showing any signs of slowing down, at least for now. The price-to-earnings ratio (P/E ratio) increased from 18.14 on 31 October 2023 to 23.44 today, indicating that shareholders are anticipating higher economic growth for the company. In addition, the current ratio of the company is at 130%, meaning that it can withstand any short-term turmoil with the current assets at hand, making it an attractive addition to investors' portfolios.

Technical analysis shows that the price is currently testing the resistance of the upper band of the Bollinger Bands after finding sufficient support around the round number of $350 in recent sessions. Although the 50-day moving average is trading well above the 100-day moving average, validating the overall bullish momentum in the market, the Stochastic Oscillator is in the extreme overbought area. This might be seen as a slowdown in the bullish rally, but for now, at least, it might not be considered a strong sign of a trend reversal. Some minor corrections might be seen in the short term, but the long-term outlook seems to be somewhat bullish, at least for the time being.

Walmart Inc.

Shares of Walmart Inc. (WMT) managed to remain positive and actually rose by around 1% for the quarter. The company’s earnings report for the fiscal quarter ending January 2024 is expected to be released on Thursday, 20 February, before the market opens. The consensus EPS is $1.63 against $1.71 for the same quarter last year.

The world's largest employer managed to recover from the losses incurred in the previous quarters, starting its comeback over the holiday season and continuing to trade in a bullish trend until the day this report was written. Also, Walmart's net income for the twelve months ending 31 October, 2023, was $16.3 billion, an 81.69% increase year-over-year.

From the technical analysis perspective, the price has found some resistance at the upper band of the Bollinger Bands and has been trading sideways ever since. The 50-day moving average is on the move to cross over the 100-day moving average but has yet to do so, although it is highly anticipated in the near term. The Stochastic oscillator has been recording extreme overbought levels for the last 2 months, hinting that a correction to the downside might be seen in the coming sessions. If this becomes reality, then the first level of possible support could potentially be found around the $167.50 price area, which is an inside support level of price reaction since mid-November 2023.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.