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My indicators are giving pretty strong buy signals this week, and I continue to believe that the market should rally until at least through mid-January.
Earlier this week, I did some research on a market phenomenon called the “January effect,” which occurs when stocks, and especially small-cap stocks, rise during January. While the January effect did not materialize in the last several years, my research showed that over the past 65 years, the market has risen in January roughly 60% of the time, with an average gain of about 2%.
That is a fairly bullish sign, but the retail sector has been struggling to keep up, to say the least. Earnings released by Macy’s (NYSE:M) and Kohl’s (NYSE:KSS) earlier this week showed a weak third quarter for retail companies, which are being severely hurt by online retailers like Amazon.com (NASDAQ:AMZN), while Nordstrom (NYSE:JWN) also fell nearly 10% as the entire sector took a hit.
With that said, today I’m recommending a bearish put option on Target (NYSE:TGT), which is also likely to come under some significant selling pressure over the near term.
Buy to open the Target (TGT) Feb 70 Puts (TGT170217P00070000) at $1.40 or lower.
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