LOW - Lowes Companies $74.55 +2.17

Sunday's Comment:

Lowes continued to slide lower on Friday, as the stock lost $0.55 to $72.38. The stock is right on the edge of starting to worry us. It is sitting right above its 20-dma of $71.61 and if it breaks down through this level next week, it will more than likely test support at $70. In addition, volume has been accelerating as the stock has been moving lower, another sign that sellers may be gaining the upper hand. Traders who might be interested in getting into LOW should wait until the stock can close above resistance of $74 on volume of at least 3.5 million shares before committing capital to the home improvement retailer.

Monday's Update:

Lowes broke through resistance at $74 on Monday, but did so on only 2.6 million shares. The fact that Lowes closed above $74 is a great sign. However, we will watch to see that volume picks up going forward into Tuesday. That being said Monday's move may be the beginnings a split-run into the company's 6/29 payable date. We are encouraged by the fact that the S&P Retail Index (RLX.X) also performed well on the day, moving higher by 10.44 points to 878.22. As the Fed meeting next week looms closer, traders might be playing the retail sector on hopes of a 50-basis point rate cut. Turning to LOW's chart, we can see that the stock just broke out of a small cup and handle formation. Given the depth of the cup, the near-term price target becomes $81. Traders who might be interested in playing LOW into its 2:1 split, may look to do so on a bounce off $74 or a break above today's high of $75.24. In either instance look for volume to reach at least 1.5 million by midday.

Picked on June 7th @ $74.00 Change Since Picked +0.55 Stop Loss @ $68.00

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