Home Depot's Stock Plummets 2.68%: What's Behind the Sudden Downturn?

Summary
• Home Depot (HD) trades at $348.43, down 2.68% intraday amid Q3 earnings miss and revised guidance.
• Q3 adjusted EPS of $3.74 falls short of $3.84 estimates, with full-year EPS now expected to decline 5%.
• Housing market stagnation and consumer uncertainty weigh on home improvement demand.
• Intraday range: $339.98 to $348.80, with 20.48% turnover rate.
Home Depot’s sharp selloff reflects a confluence of weak earnings, bearish guidance, and macroeconomic headwinds. The stock’s 8% year-to-date underperformance contrasts with the S&P 500’s 13% rally, signaling investor unease over the housing sector’s prolonged slump and its impact on DIY and professional demand.

Earnings Disappointment and Housing Woes Fuel Sell-Off
Home Depot’s 2.68% intraday drop stems from a Q3 earnings report that missed expectations and a revised full-year outlook. CEO Ted Decker cited 'greater than expected pressure in certain categories' due to the lack of storms, which typically drive demand for roofing and generator sales. The company also highlighted 'consumer uncertainty and continued pressure in housing' as key drags on home improvement demand. With comparable sales growth now projected to be 'slightly positive' for the year (down from 1%), and adjusted EPS expected to decline 5%, investors are pricing in a protracted slowdown in housing turnover and DIY activity. The 52-week low of $326.31 looms as a critical psychological threshold.

Home Improvement Sector Suffers as Consumer Uncertainty Lingers
The home improvement sector is broadly under pressure, with rival Lowe’s (LOW) down 0.9% intraday. While Home Depot’s selloff is sharper, both stocks face similar headwinds from a stagnant housing market and high borrowing costs. The sector’s sensitivity to housing turnover—where 90% of DIY customers are homeowners—means prolonged mortgage rate stagnation and weak home price growth will continue to suppress demand for large-scale projects. However, Home Depot’s larger exposure to professional contractors (via SRS and GMS acquisitions) may offer some resilience if commercial activity outpaces residential demand.

Bearish Technicals and Put Options Highlight Short-Side Opportunities
• 200-day average: $379.36 (above) • RSI: 23.34 (oversold) • MACD: -7.37 (bearish) • Bollinger Bands: $358.97–$394.98 (price near lower band)
• Key support/resistance: 30D support at $377.67, 200D support at $366.98
Home Depot’s technicals reinforce a bearish bias, with RSI in oversold territory and MACD signaling momentum divergence. The stock is trading near the lower Bollinger Band, suggesting potential for a continuation of the downtrend. For short-term positioning, the HD20251121P340 and HD20251121P342.5 put options stand out:
• HD20251121P340 (strike $340, expiration 11/21):
- IV: 37.79% (moderate)
- Leverage ratio: 126.01%
- Delta: -0.3069 (moderate sensitivity)
- Theta: -0.1456 (moderate time decay)
- Gamma: 0.0256 (high sensitivity to price moves)
- Turnover: $206,393
- Payoff at 5% downside: $10.43 (max profit if HD drops to $330.99)
- Why it stands out: High leverage and gamma make this contract responsive to further declines, while moderate IV ensures reasonable cost.
• HD20251121P342.5 (strike $342.5, expiration 11/21):
- IV: 35.48% (moderate)
- Leverage ratio: 104.37%
- Delta: -0.3678 (higher sensitivity)
- Theta: -0.0591 (low time decay)
- Gamma: 0.0293 (high sensitivity)
- Turnover: $85,911
- Payoff at 5% downside: $12.53 (max profit if HD drops to $328.49)
- Why it stands out: Lower theta reduces decay risk, while higher delta amplifies gains if the stock breaks below $342.50. Aggressive bears may consider HD20251121P340 into a breakdown below $340, while cautious short-siders could target HD20251121P342.5 for a deeper pullback.

Backtest The Home Depot Stock Performance
The back-test results are now ready. Please view the interactive report below for detailed performance metrics of Home Depot (HD) after every −3 % (or larger) one-day drop since 2022.Key takeaways:• Sample size: 25 plunge events (≥ −3 % daily drop). • Post-event performance is mixed; median 5-day rebound ≈ +0.6 %, 10-day ≈ +0.3 %, 20-day ≈ +1.3 %. • Win rate hovers near coin-flip (≈ 50-60 %) across most holding horizons; statistical significance not observed. • Average cumulative excess return vs. S&P 500 remains modest (< 2 %) over 30-day windows, indicating no strong edge in buying immediately after such drops. Feel free to explore the interactive chart for day-by-day return curves, distribution of outcomes, and individual event drill-downs. Let me know if you’d like deeper cuts (e.g., filtering by market regime, larger plunges, or adding stop-loss/ take-profit overlays).

Beware the $340 Breakdown: Short-Side Playbook for Home Depot
Home Depot’s selloff reflects a perfect storm of weak earnings, housing market stagnation, and consumer caution. With RSI in oversold territory and key support levels at $340 and $337.50, a breakdown below $340 would validate the bearish case. Investors should monitor the HD20251121P340 put option for short-side entry, while keeping an eye on Lowe’s (LOW) -0.9% move as a sector barometer. If $327.50 (200D support) breaks, the 52-week low of $326.31 becomes a critical target. Action: Short HD at $340 with a stop above $345.