The housing market is beginning to show signs of renewed strength, creating opportunities beyond the homebuilders themselves. As activity improves, companies tied to home construction, remodeling, and renovation could also benefit from increased demand. One such name is Floor & Decor, a leading specialty retailer that may be well positioned to participate in a broader housing recovery.
We recently highlighted the improving backdrop for homebuilders, but the strength extends more broadly across the consumer discretionary space. The State Street Consumer Discretionary Select Sector SPDR ETF is now pressing against both its 50-day and 200-day simple moving averages from below. A potential double bottom base is taking shape as the group attempts to regain momentum.
Within the broader consumer sector, home improvement retail remains highly concentrated, with Home Depot and Lowe's as the primary peers alongside Floor & Decor. Over the past three months, Floor & Decor has advanced 20%, compared to a 9% gain for Home Depot and a 5% decline for Lowe's. Market participants often look for that type of relative outperformance when making selective individual investment decisions.
With that context in mind, let's turn to Floor & Decor's technical picture and why it appears well positioned for the second half of the year.
Floor & Decor is a specialty retailer of flooring and installation materials for home renovation and construction projects. While the stock remains down 2% year to date and still trades 36% below its 52-week high, recent price action has turned more constructive, with two 12.5% weekly gains over the past three weeks. That type of momentum shift may suggest the beginnings of a more meaningful recovery and could present an attractive entry point.
Looking at the daily chart, the first thing that stands out is the bullish RSI divergence. While the stock recorded a lower low in April and May, the RSI posted a higher low, signaling that downside momentum was fading and selling pressure was beginning to ease.
That improving momentum coincided with the completion of a bullish inverse head-and-shoulders pattern. The lows of the formation were marked by a spinning top followed by a bullish hammer on May 18 and 19.
Since then, Floor & Decor has traded above its 21-day exponential moving average for six weeks, aside from a brief three-day pullback. The stock now appears poised to challenge its 200-day SMA, a level that capped rallies last September and January. Investors can consider initiating positions here, targeting $69 by the fourth quarter, representing 16% upside from current levels. Remain bullish above $54.
Floor & Decor was trading around $60 Wednesday.
With the monthly chart now complete following Tuesday's close, it's worth taking a step back to assess the longer-term picture. The ratio chart versus the broader State Street SPDR S&P Retail ETF was in a steady uptrend from the summer of 2019 through early 2025 before entering a period of relative weakness. Recent price action, however, suggests that relative performance may be turning back in Floor & Decor's favor.
The monthly chart is becoming increasingly constructive. June produced a powerful 15% gain while closing at the top of its monthly range, following May's bullish hammer candlestick on the highest monthly volume in the stock's history at the very round $50 level. That successful test also retested the former bullish ascending triangle breakout from the first half of 2020, a level that had acted as stubborn resistance since late 2017. With long-term support holding, a double-bottom base that began with a doji in December 2021 now appears to be taking shape.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 01, 2026 12:27 ET (16:27 GMT)
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