Home Depot Inc (NYSE:HD), Moody’s Corporation (NYSE:MCO) and Tesla Inc (NASDAQ:TSLA) shares are ready to put on a show for traders this week as all three companies are facing technical levels and earnings reports that are likely to move their stocks.
Today’s big three stock charts takes a look at the technical pictures for each of these market movers as we head into the week.
Home Depot Inc (HD)
The big box hardware retailer is heading into earnings season on Tuesday as the stock is trading near its all-time highs and has found it hard for the stock to advance against this glass ceiling.
In general, Home Depot’s stock has benefited from earnings results over the last year as the stock averages a performance of 2.8% in eight of the last twelve reporting seasons.
Overbought conditions on HD stock are flashing a few warnings signs. Our experience through the market during this earnings season is that many of the stocks that have headed into earnings season on overbought conditions have almost always resulted in “sell the news” activity, regardless of how good the earnings report.
Bottom line, from a short- and long-term perspective, Home Depot shares are overbought to the point where traders should expect to get a chance to “buy the dip” after their earnings report on Wednesday.
Moody’s Corporation (MCO)
Another company hitting our technical screen today is Moody’s. The bond rating organization has been outperforming the market of late as shares are trading 23% higher year-to-date against the S&P 500’s returns of about 7%.
MCO shares are in the processing of bouncing off of their 50-day moving average, which is also trending higher. The stock has found support from this trendline since breaking above it in January. Moody’s stock has also developed a strong momentum trend according to its MACD indicator.
We should see some technical resistance for MCO as the stock approaches $120, but low analyst ranks and relatively high short interest suggests that the crowd is still on the wrong side of this trade, meaning that we could start seeing some of the bears migrate into the buyers camp, which would help drive us above this critical level.
Tesla Inc (TSLA)
Finally, Telsa. The stock is doing battle with the $320-level for a second time in as many weeks as the stock is seeing some activity from the “sell the news” crowd again as TSLA fails to move into new high territory.
A good earnings report pushed Tesla shares right to the edge of their “danger zone”, but continued questions on how the company will handle production demand as it grow wears thin on the bull’s ability to hold the stock.
Shares of TSLA remain above their 50-day moving average. This trendline is also moving higher, which is bullish for the intermediate-term outlook. We are seeing Tesla shares bounce around the overbought indicator levels, which should accelerate selling pressure.
Support for TSLA stock should kick-in around $290 and then again at $270 if the selling pressure were to gain momentum.
For now, Tesla stock remains a short- and intermediate-term buy based on the technicals; however, those willing to wait a few days or weeks are likely to get a better price for the stock as we allow the “sell the news” crowd to have its way with the shares over the short-term.
As of this writing, Chris Johnson, Johnson Research Group did not hold a position in any of the aforementioned securities.
