Here’s a preview of what I’ll be discussing on Talking Numbers today around 3:20 to 3:30 pm EST on CNBC:
After Hurricane Sandy, many pundits came out recommending the building materials stocks in anticipation of extensive reconstruction efforts. HD and LOW were at the top of that list.
We’re inclined to fade that enthusiasm in HD, as Dan laid out in his options trade last week. But on a longer-term basis, what do the charts say about HD vs. LOW?
First, the 20 year chart in HD:
If we look at the 20 year chart of HD, we can see a very similar rally in the past 4 years to what happened from 1995 to 1999. HD had a gradual, healthy, 3 year rally from 1995 to 1998, then a rapid 1 year rally from 1998 to 1999, in which the stock more than doubled.