Friday’s market selloff tested many traders’ resolve, but it also revealed something interesting – stocks showing relative strength during weakness often become tomorrow’s leaders.

Thanks to the S.A.M. AI Scanner doing the heavy lifting, I was able to quickly identify one of these resilient names that’s setting up beautifully.

That’s exactly what caught my eye with Home Depot (NYSE: HD).

The scanner lit up showing multiple squeeze formations, and when I dug deeper, the technical picture got even better.

While the broader market took a hit, HD stayed in the green, demonstrating impressive relative strength that demands attention.

And if you know me, when I see the scanner highlighting multiple compression signals combined with relative strength, that’s when I start paying very close attention.

Technical Setup

Squeeze Formation

The compression I’m seeing in HD is particularly intriguing. We’re currently observing squeezes on both the daily and 78-minute timeframes – a powerful combination that often precedes significant moves.

Think of it like a pressure cooker building steam. The simultaneous compression across these timeframes suggests energy is building beneath the surface, and when it releases, the move could be substantial.

What makes this setup even more compelling is its occurrence near the 52-week high of $421.56. When compression happens at these levels, it often indicates accumulation rather than distribution.

EMA Configuration

The EMA structure on HD is picture-perfect. The daily and weekly EMAs are stacked in bullish formation, with shorter-term averages riding above longer-term ones – a classic sign of strong trend structure.

This orderly arrangement of moving averages creates a series of dynamic support levels, giving us clear areas to manage risk.

Relative Strength

Friday’s price action told us something crucial about HD. While the broader market struggled, HD maintained its positive trajectory.

This kind of relative strength, especially during market weakness, often signals institutional accumulation and underlying buying pressure.

When a stock shows this kind of resilience near major resistance levels, it often suggests that:

• Large institutional buyers are willing to defend their positions
• Sellers are unable to push prices lower despite the broader market weakness
• The stock has potential to break through resistance once market conditions improve

This combination of relative strength at highs, coupled with our squeeze setup and stacked EMAs, creates a compelling narrative for potential upside movement.

Company Snapshot

Home Depot stands as America’s largest home improvement retailer, recently beating Q3 expectations with $40.2B in revenue.

Their consistent execution and strategic initiatives in both professional and DIY segments continue to drive results.

Catalysts

• Strong Q3 earnings beat
• Robust operational execution
• Strategic market positioning
• Technical setup suggesting potential breakout

Your Action Plan

I have not initiated a position in HD yet, but it was on that I have on my radar this morning.

If I do play it, I will be using options to express my position, likely buying call options.

Remember, setups like this – where technical strength aligns with relative strength – are exactly what we look for in our trading.

Want to spot setups like this faster?

The S.A.M AI Scanner does the heavy lifting for you.

Click here to learn more about how it can transform your trading.