HD Supply Holdings Inc (NASDAQ: HDS)

HD Supply Holdings, Inc. operates as an industrial distribution company in North America. It operates in four segments: Facilities Maintenance, Waterworks, Power Solutions, and White Cap. The company distributes maintenance, repair, and operations products, including electrical and lighting items, plumbing products, HVAC products, appliances, janitorial supplies, hardware, kitchen and bath cabinets, window coverings, textiles and guest amenities, healthcare maintenance products, and water and wastewater treatment products; fasteners, builders hardware, ropes and chains, and plumbing accessories; and kitchen cabinets, windows, plumbing materials, masonry, electrical equipment, lumber, flooring and tools, and tool rentals.

To review HD’s stock, please take a look at the 9-month chart of HDS (HD Supply Holdings, Inc.) below with my added notations:

9-month chart of HDS (HD Supply Holdings, Inc.)

HDS has been trading between $21 and $25 for most of its existence. The stock had created a clear level of resistance at that $25 (blue), which was also a 52-week high (or 9 month) resistance. A break through that level would most likely mean higher prices for the stock, and as you can see from the chart, HDS finally broke higher last week on a nice spike in volume.

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The Tale of the Tape: HDS broke out to a new 52-week high. A long trade could be made near $25 with a stop placed below that level. A break back below $25 would negate the forecast for a continued move higher.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach