Chart Analysis:
Home improvement retailers nationwide have already seen a boost in revenue as residents in the path of Sandy stocked up on storm supplies; batteries, flashlights, generators and water flew off the shelves as Sandy loomed. With the aftermath of Hurricane Sandy estimated at upwards of $10 billion, revenue for the big box home improvement retailers, Home Depot ($HD) and Lowe’s ($LOW), are almost certain to surge. While popular belief might suggest a long position to profit from the aftermath of a catastrophic storm, Wall Street has already price adjusted for the aftermath as it’s no secret that raw building materials will experience a significant increase in demand. Today’s NinjaTrader Chart of the Day, made possible by the free end of day Kinetick data feed, showcases a Daily Line on Close Home Depot ($HD) and Lowe’s ($LOW) price action. Hurricane Irene was marked on the chart to illustrate the lack of short term impact that the storm had on each respective commodity. The upward trend rather is likely due to the strengthening of the overall market, as one of the first indicators of a strengthening market is new home startups. The ADX (Average Directional Index), for both price actions does an excellent job measuring the strength of a prevailing trend. With both ADX Indicators well above 20, one can assume that housing was on its way to recovery; however only time will tell the long term implications that Sandy will have on the markets. From everyone at NinjaTrader, our thoughts and well wishes are with all of those affected by Hurricane Sandy.
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