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This is the beginning of a new month, which means that the market should have a bullish bias as fund managers put new capital to work. Historically, stocks tend to rise about 70% of the time at the start of a month, although that certainly didn’t happen yesterday. Those managers may get the opportunity to buy at lower prices, however, as I believe that a retest of the Feb. 9 lows is in progress.
That was a very severe selloff we saw earlier this month and, because it went so far so fast, it created a strong level of support. While the major indices are likely to “retest” that support level at the lows, I do not think it will be violated to the downside. So, I’m willing to consider bullish plays while they’re at bargain-basement prices, and for today’s recommendation I’m joining Carl Icahn in taking a bullish position on Newell Brands Inc (NYSE:NWL).
His fellow activist investor, Bill Ackman, was always pretty bearish on Herbalife Ltd. (NYSE:HLF) and made a presentation several years ago about how bad the company was – and was countered by Icahn, who of course saw a “short squeeze” going on, got in, and pressed the stock price way up, to the level it’s still at today. Now he’s aiming for a repeat performance with classic consumer-goods stock Newell Brands, maker of everything from Sharpie to Rubbermaid.
Here’s how I recommend trading the situation:
Buy to open the NWL Apr 27 Calls (NWL180420C00027000) at $1.45 or lower.
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