• Chart of the Day: Lowe’s Companies (LOW)

    by  • March 15, 2013 2:22 pm • Charts to Watch, Quick Hits, Tony Venosa's Chart of the Day • 0 Comments

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    Today’s chart is of Lowe’s Companies (LOW) which operates as a home improvement retailer.  It offers a range of products for maintenance, repair, remodeling, and home decorating.

    Ticker:  Lowe’s Companies (LOW)

    Strategy:  Long Trade

    What I Am Looking At:

    • Consumer Discretionary/ Housing have been very strong relative to the broader market
    • LOW outperformance on a year-over-year basis, +28 percent
    • Up nearly 10 percent year-to-date which coincides with the round number $40 level and the all-time high may portend to a pullback in shares
    • Shares are taking on a possible double top formation
    • Enormous jump in short interest, up nearly 140 percent during the past 2 weeks, and now accounts for 4 percent of the float
    • Recent open interest ratio for the front three months shows a preponderance of calls versus puts, which could act as a headwind for shares in the near-term
    • 50-day buy-to-open call/put ratio stands at 1.54, showing a preference for call purchases
    • Divisive analyst community as 10 out of 20 analysts rate the shares a “hold” or worse
    • Implied volatility on options are the cheapest in over a year


    Strategy:  Expecting pullback, look for possible buy at rising 80-day moving average (purple line) or the $36 level (green support line)


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    Tony Venosa, CMT is a Senior Options Strategist and works on the trading desk at Schaeffer’s Investment Research. He joined Schaeffer’s in 2010. He has worked in the finance industry for over 15 years. He began his career as a trading assistant in Chicago on the floor of the Chicago Mercantile Exchange. He later moved upstairs and worked as a commodities broker on both the retail and hedging side. He left the brokerage industry to begin his trading career as a proprietary equities trader at a Chicago firm. In 2000, Tony moved backed to his hometown and continued trading his personal account. He later went on to earn his Chartered Market Technician designation. He earned a B.S. in Finance from Miami University. Tony’s main focus is short-term directional option trading.


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