Up Next: Dow Domination

Amazon’s market cap hit $1 trillion to kick off the trading month. Jeff Bezos is hot on Tim Cook’s trail, leaping over the trillion-dollar hurdle just one month behind Apple Inc.

Meanwhile, Nike is making waves with a new ad campaign featuring controversial quarterback Colin Kaepernick. The stock dropped more than 2.5% by the closing bell while people argued about football and politics on the internet. Apparently, some folks are so mad they’re burning their sneakers. Strange times.

Here at Rude HQ, we don’t waste our precious mental energy on arbitrary market-cap milestones or football controversies. Despite the media attention, a $1 trillion market value means absolutely nothing to Amazon. You can also bet Nike’s marketing department is celebrating the unprecedented attention (positive and negative).

Looking beyond the sensational headlines, we’re tracking more important developments in the Dow…

For starters, the Dow is the only one of the major averages that has yet to top its January highs. Trade war fears remain a top concern for investors, yet the industrials are just a few percentage points from their all-time highs.

But August’s impressive rally is changing the conversation. Now we’re beginning to see the breakout action that should help push the Dow to new highs before the fourth quarter.

Just check out Home Depot (NYSE:HD).

America’s top home improvement big-box store is posting its first new all-time highs in seven months to kick off September trade.

home-depot

When we originally hopped onboard Home Depot as a long-term trade last year, our thesis was simple: the home improvement giant would continue to thrive even as Amazon ripped apart the retail sector.

Home Depot sells stuff that people don’t buy online: Lawn mowers. Appliances. Lumber. Drywall. Circular saws. Grills. Kitchen sinks. Not exactly your typical Amazon cart at checkout.

Plus, Home Depot had just kicked off 2017 in style with a massive fourth-quarter earnings beat. Home Depot didn’t just smash analyst expectations – it also raised its dividend and announced a $15 billion repurchase program.

The home improvement giant’s growth isn’t all smoke and mirrors, either. While many retailers frantically built new stores to grow revenue as Amazon moved in on their turf, Home Depot posted impressive numbers through organic growth from increasing foot traffic and contractor sales. Real estate market conditions are also helping Home Depot this year. Tight new home inventories are keeping more consumers in their current homes, where they’re opting to renovate instead of trying to buy.

Of course, we didn’t have to wait for the stock to crack new highs before taking advantage of a profitable buy signal this year. Our most recent buy alert for shares of Home Depot came in early June as the stock topped $190 for the first time in four months. Home Depot shares were finally shaking off slow spring sales and powering higher.

At the time, I noted that the breakout put the stock’s January highs back in play. Three months later, we’re rewarded with a strong breakout to new all-time highs.

It’s been anything but an easy year for Home Depot. The stock lost more than 17% of its value between it’s the weeks following its January peak. But patience is finally paying off for long-term minded shareholders.

If HD can harness its latest momentum move, the stock stands to ride a significant rally into the fourth quarter and beyond.

Sincerely,

Greg Guenthner

[Ed. Note: Send your feedback here: askgreg@sevenfigurepublishing.com – and follow me on Twitter: @GregGuenthner]

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Rude Awakening PRO and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing for 13 years. In 2018, Greg’s Rude Awakening PRO portfolio beat the S&P 500 by 14%.

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