One of the BloggingStocks editors recently instant messaged me and said, "You know, I think technical analysis is bull." I've heard this opinion very frequently, and I've even held this opinion in the past. But from watching stocks for several years I've seen certain price moves that seem to occur again and again. Sure enough, these movements are some of the most fundamental elements of technical analysis; for example, support, resistance, uptrend, etc. I've seen many people who don't know any technical analysis but reference a stock's breakout on its "graph" -- just from watching stocks trade, they have realized this is often a sign of future profits to come.

As I began studying technical analysis more frequently, I learned more about the skill -- moving averages, indicators, oscillators, and so on. Many of these tools, in my opinion, do in fact have predictive value in the stock market. More importantly, these tools allow traders to more effectively and systematically (therefore, less emotionally) manage their money.

All this being said, I think the editor was right in one regard -- I have a lot of trouble believing in patterns (e.g., "Head and Shoulders") because I think that many of these are way too objective when it comes to trading. I also find that they are harder to explain than many other tenets of technical analysis, such as support and resistance.

I've been on all sides of the technical analysis argument -- extraordinarily against, emotionally for, and everything in between. As it stands now, I feel like it's just another tool in the toolbox for a trader and there's no reason not to consider it.

Home Depot Inc (NYSE: HD) declined a mere $0.37 in trading yesterday despite reporting awful results. Same store sales were down 6.6% for the quarter and in one month were down 11%--that is pretty bad.

However, despite these tough results, management appeared to be confident that the weakness is manageable and measurable. It appears the worst might be hitting Home Depot currently and the poor operating performance could bottom in the first half of 2007.

While Home Depot's supply business rolled over, the real concern appears to be its decision to enter the electronics appliance business. Home Depot mentioned this business was very disappointing. This could be a business line they exit.

Due to the relatively good stock performance following such awful results, investors need to start looking at this stock again. Home Depot will most likely be a Fed stock -- meaning when there is enough evidence that the Fed might start dropping rates, Home Depot stock might be off to the races.

The other thing to look for is a bottoming in its same store sales decline.