The Home Depot Surges 4.21% as Bulls Rally: What's Fueling the Momentum?

Summary
• The Home Depot (HD) rockets 4.21% intraday to $374.72, defying its 52-week low of $326.31.
• Sector peers like Lowe's (LOW) mirror the frenzy, surging 4.28% on synchronized buying.
• Options frenzy erupts: 3,376 contracts traded for the 1/16 385C strike, signaling aggressive bullish bets.

Home Depot’s explosive move has ignited a firestorm in the home improvement sector, with technical indicators and options data painting a picture of institutional conviction. As rivals like MILGARD Windows and Culp Inc. unveil innovation-driven strategies, the market is recalibrating its expectations for 2026. With the stock trading near its 52-week high of $426.75, the question now is whether this is a breakout or a flash rally.

Sector Strength Drives Home Depot's Rally as Rivals Follow Suit
The Home Depot’s 4.21% surge aligns with a broader sector-wide updraft, as rivals like Lowe’s (4.28%) and Culp Inc. (NYSE: CULP) report improved Q4 results and innovation-driven strategies. While no direct company-specific news triggered the move, the sector’s collective momentum—fueled by MILGARD’s $150M Tacoma facility upgrade and Doma’s intelligent door/window launches—has created a tailwind. Technically, the stock’s bullish Kline pattern (看涨吞没) and MACD crossover above the signal line (-1.82 vs. -3.19) confirm a short-term breakout from a 200-day range. The 30-day moving average at $351.42 now acts as a critical support level.

Home Improvement Sector Unites as Bulls Take Control
The Home Depot’s 4.21% gain mirrors Lowe’s 4.28% jump, suggesting sector-wide optimism. MILGARD’s $150M investment in Tacoma’s fiberglass production and Doma’s AI-integrated home products are reshaping market expectations. While HD’s 24.14x P/E lags behind Culp’s 22.7x, the sector’s synchronized rally indicates a shift toward innovation-driven valuations. The 52-week high of $426.75 remains a distant target, but the current momentum suggests a re-rating is underway.

Options Playbook: High-Leverage Calls for Aggressive Bulls
• 200-day average: $373.00 (just below current price)
• RSI: 53.16 (neutral, but rising)
• MACD: -1.82 (bullish crossover)
• Bollinger Bands: $339.75–$361.13 (price now above upper band)

With HD trading near its 52-week high and technical indicators confirming a breakout, aggressive bulls should target the 1/16 370C and 375C strikes. These contracts offer high leverage (50.85% and 79.62%) with moderate deltas (0.645 and 0.486), balancing directional exposure with time decay. The 370C’s $643,986 turnover and 342.29% price change ratio suggest strong liquidity, while the 375C’s 450% price change ratio hints at explosive potential if the rally continues.

• HD20260116C370
- Type: Call
- Strike: $370
- Expiry: 2026-01-16
- IV: 22.20% (reasonable)
- LVR: 50.85% (high)
- Delta: 0.645 (moderate)
- Theta: -0.7498 (rapid decay)
- Gamma: 0.0302 (high sensitivity)
- Turnover: 643,986
- Payoff (5% upside): $23.46/share
- Why it stands out: High leverage and liquidity make this ideal for a short-term breakout.

• HD20260116C375
- Type: Call
- Strike: $375
- Expiry: 2026-01-16
- IV: 22.67% (reasonable)
- LVR: 79.62% (extreme)
- Delta: 0.486 (moderate)
- Theta: -0.6669 (rapid decay)
- Gamma: 0.0317 (high sensitivity)
- Turnover: 189,445
- Payoff (5% upside): $18.46/share
- Why it stands out: Extreme leverage amplifies gains if the rally accelerates past $380.

Aggressive bulls should prioritize the 370C for its liquidity and 375C for its explosive potential. Both contracts thrive in a 5% upside scenario (targeting $393.46), but require strict stop-loss discipline if the 200-day average ($373.00) fails to hold.

Backtest The Home Depot Stock Performance
The backtest of HD's performance following a 4% intraday increase from 2022 to the present shows mixed results. While the stock experienced a maximum return of 0.78% during the 30-day win rate period, the overall average return was only 0.47% over 30 days. This suggests that while there were opportunities for gain, they were not consistently capitalized upon, as indicated by the lower 3-day and 10-day return rates of 0.01% and 0.24%, respectively.

Bulls Take Command: HD's Rally Shows No Signs of Slowing
The Home Depot’s 4.21% surge is not a flash rally but a calculated breakout driven by sector-wide innovation and technical momentum. With the 200-day average ($373.00) now acting as support and the 52-week high ($426.75) within striking distance, the path of least resistance is upward. Investors should monitor the 370C and 375C options for liquidity and leverage, while keeping a close eye on Lowe’s (4.28% gain) as a sector barometer. If the 373.00 level holds, this could be the start of a multi-week rally. Act now: Buy the 1/16 370C for a high-leverage play on a breakout above $380.