Finding New Leaders In A New Leg of Bull Market

Nothing drives bull markets quite like rising earnings and rising expectations.

That's the reason we keep our Strong Earnings ChartList (SECL) and Raised Guidance ChartList (RGCL). We do the research for our members, so no one has to guess at solid trade candidates. Yesterday, Home Depot (HD) threw their name out there. After reporting better-than-expected earnings, HD soared more than 4%, extending what has already become a very nice uptrend:

Enter Home Depot (HD):

The interesting part was that, until yesterday, HD had been downtrending vs. its peers. In other words, its recent strength and trend above its rising 20-day EMA line was the direct result of being "dragged" higher by the overall market. Yesterday's solid earnings action turned that relative strength higher (blue circle).

What does this mean?

• We need to see this relative strength line continue to improve. If it does, HD will be a solid trading prospect in the days and weeks to come.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.