Home Depot HD is slated to report first-quarter 2021 earnings before the opening bell Tuesday, and traders will be watching to see how the massive increase in lumber costs has affected the home improvement retailer's sales.

In its fourth-quarter 2020 earnings print released on Feb. 23, Home Depot reported sales of $32.3 billion, a 25.1% increase over the $6.5 billion it reported the year prior and earnings per share of $2.65 compared to $2.28 for fiscal 2019.

From March 5 to May 10, shares of Home Depot soared over 40% before consolidating over the last week. Traders and investors may be waiting to see if customers have continued to focus on home repairs and renovations in the wind down of the COVID-19 pandemic.

The Home Depot Chart: Home Depot’s stock made a new all-time high of $345.69 on May 10.

On May 11 and 12, the stock lost 7.07% of its value. The downturn left a small gap at the $139 level. Since gaps fill 90% of the time, it is likely Home Depot’s stock will trade back up in that price range in the future.

During the last four trading days, Home Depot has traded sideways, maintaining a support level at $315.40 and rejecting a resistance level at $328.83.

On May 11, Home Depot’s stock lost support of the eight-day and 21-day exponential moving averages and has so far been unable to gain them back as support.
The eight-day EMA is still trending above the 21-day EMA, however, and a with a bullish move north, the stock could recapture the two commonly followed EMAs. Home Depot is trading above the 200-day simple moving average, which indicates overall sentiment in the stock remains bullish.

Bulls want to see an earnings beat and for bullish volume to come in and push Home Depot’s stock back up over the $328 level. If it can regain that level as support, it has room to move up and fill the overhead gap.

Bears want to see an earnings miss and for bearish volume to drop the stock below support at $315. If Home Depot is unable to hold $315, it could revisit $303.30.

HD Price Action: Shares of Home Depot were trading down 1.77% at $317.67 at last check Monday.