Some of the worst performing stocks in 2016 in the Dow Jones Industrial Average are not industrials, they are in fact consumer discretionary. On Friday we highlighted the poor 2016 performance in MCD, today making a new low on the year down almost 5%, and down about 15% from its all time highs made in May (Making A Meal Out Of It). There is obviously the long national nightmare that has been Disney’s (DIS) 25% decline from its August 2015 all time highs and its 13.7% ytd declines. Nike down a whopping 18% on the year and down 27% from its all time highs made in late December.
The last one though it is a bit unexpected, The Home Depot (HD), a stock like the others that until recently has been Teflon in almost every market environment in the last 5 years. HD is down 5.25% on the year, and down 10% from its all time highs made in early August, vs the Dow up 3.7% on the year and only down about 3% from its all time highs made this summer.
As traders like moi like to say, the stock is at a key level (that’s non scientific technical chatter):
Longer term though, the uptrend that has been in place since its 2011 lows, is worth keeping an eye on, as its coincides with the 2015 break-out level near $120 as a very important level for the stock to hold:
The next identifiable catalyst for the stock will be Q3 earnings on Nov 15th. The options market is implying about a 5% move in either direction between now and Friday Nov 18th’s close. With the stock at $125, the Nov 18th 125 straddle (the call premium + the put premium) is offered at $6.35, if you bought that and thus the implied movement you would need a rally above $131.35 or a decline below $118.65 to make money.
I would add that the moves over the next month seems fair despite the fact the stock on average over the last 10 years has moved a little less than 3% the day following results. But factoring in the election, and what appears to be the unease with equities watching rates go to far to fast in anticipation of a Dec Fed Funds increase (current odds at 67%), and stock replacement strategies for existing longs, or traders looking to press a short might consider picking a direction with the at the money call or put only about 2.5% of the underlying right now.