Sell Short Home Depot And Marvel Technology Group

On the 16^th, the end-of-month (EOM) period of strength expired. It will also be the end of the bullish July OPEX (options expiration) week. We have confirmation due to the weak close on Friday. The Monday opening has a 65%-70% likelihood of being a down day. Leveraged short positions are recommended. The 4265 level is a 38% retracement of the recent rally. That is the minimum downside projection for the short-term.

July Post-OPEX Week S&P Change

Blue: Average Percentage Change

Red: Probability of a rise on that day

Green: Expected Return (Product of the first 2)

Home Depot is likely to decline in the coming week. There are several reasons for this projection:

·       Only 4 of the 5 coming trading days have seasonally shown a positive return.

·       The daily cycle peaks on the 19^th. This cycle has been correct in 65% of 14 occurrences in the last year.   

·       Relative strength has been falling since early May.

These shares are likely to fall slightly to $310.

Chart 1:  Daily Cycle

Chart 2:  Daily Graph

Marvel Technology Group is due to fall. In the coming week, only 1 day has historically generated a positive return. The weekly cycle (83% accurate in the last year) peaked on July 4^th and the daily cycle (86% accurate) peaks on the 21^st. In fact, the 21^st has been the weakest day in July. The $52-$50 area is a reasonable objective.

Chart 3:   Weekly Cycle

Chart 4:   Daily Graph