The market is in the busiest part of the earnings season, but today’s trade idea won’t report on until August 20th.
Keeping with my recent theme of focusing on trades that are setting up to run while the market is consolidating, today’s idea has a very powerful flag that could begin a big rally into its earnings date.
Read below for a trade that could benefit from earnings season even before it announces its own news.
As you can see in the chart below, Home Depot (HD) is pulling back from an all-time high breakout into the obvious support level.
The low of the flag sits on the $210 level. As long as this remains the low, this setup is intact.
The best place for the flag to have bottomed would have been $215 because that was the high that was broken.
As a result, $215 is now the resistance the bulls need to clear for the up trend to continue, and it defines a very clear trade entry trigger.
Therefore, the trade set up is to buy a breakout over $215 with a stop under $210.
Every trade should be this simple.
Rick Nartarian, Chief Investment Officer
The American Investor Daily