With the sharp pullback in financial and industrial sectors today, we look for weak stocks within those sectors for possible tops. UPS is part of the industrial sector which has experienced a 0.15% move higher this month, however it’s 1m trend turned mildly bearish today, suggesting a possible top.
UPS has a technical score of 4 (weak) and it’s 1m/6m trend has turned bearish and neutral on 1/10 while breaking below its $115 support level. After breaking below its 200 day moving average today, look for UPS to stay level or possibly slide lower before earnings on Jan 31st. If you agree with this analysis, look to sell a Feb 10 115/117 Call Credit Spread for $0.75 per contract.
This strategy profits if UPS ($114.07) stays below $115.75 by Feb 10th expiration (64% probability). This benefits whether UPS stays flat or moves lower. Risking a max of $125 if UPS was to close above $117 by expiration.