NEW BEARISH Plays
Ingersoll-Rand - IR - close: 52.84 change: -0.83
Stop Loss: 55.75
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on September -- at $---.--
Listed on September 5, 2015
Time Frame: Exit
Average Daily Volume = 2.3 million
New Positions: Yes, see below
In the last week of August the second estimate on U.S. Q2 GDP growth was revised higher from +2.3% to +3.7%. Q3 GDP is expected to dip down to +1.5%. The good news is that the U.S. is still growing. The bad news is that much of the world is slowing down. Big companies that do a lot of business overseas are seeing their sales slow. That's in addition to the negative impact of currency headwinds.
Industrial stocks have suffered this year. Sector ETFs like the XLI and IYJ are down about -9% year to date. IR is in the industrial sector and it is underperforming its peers with a -16% decline in 2015.
Here's a brief description of the company,
"Ingersoll Rand (IR) advances the quality of life by creating comfortable, sustainable and efficient environments. Our people and our family of brands-including Club Car®, Ingersoll Rand®, Thermo King® and Trane®-work together to enhance the quality and comfort of air in homes and buildings; transport and protect food and perishables; and increase industrial productivity and efficiency. We are a global business committed to a world of sustainable progress and enduring results."
That big drop on IR's daily chart was the market's reaction to their earnings report. Wall Street was expecting a profit of $1.23 a share on revenues of $3.69 billion. IR missed on both counts with a profit of $1.20 on revenues of $3.6 billion. Management lowered their guidance for the current quarter below analysts' expectations.
Technically the oversold bounce from this post-earnings drop didn't make it very far. Then the broader market started correcting lower in a violent fashion and shares of IR plunged to new 52-week lows. The oversold bounce from the late-August crash has already failed. This decline has generated an ugly sell-signal on the point & figure chart, which is forecasting at $36.00 target for IR.
Currently IR appears to have short-term support at $52.50. We are suggesting a trigger to launch bearish positions at $52.40.
FYI: IR will begin trading ex-dividend on September 9th. The dividend is $0.29 a share.
Trigger @ $52.40
- Suggested Positions -
Short IR stock @ $52.40
- (or for more adventurous traders, try this option) -
Buy the OCT $50 PUT (IR151016P50) current ask $1.40
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike