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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)