בס״ד

Stock Market Hot, Stock Market Cold. Carrier Gets Plug Pulled (CARR)

Posted on September 5, 2021

We start with a brief note on this week’s editorial calendar.

As tomorrow begins the holy, two-day Rosh HaShana holiday, we will not be publishing A Jew and His Gold this Thursday.  We will not be in the office, and we will not be looking at our screens.

If there’s action required on either Thursday or Friday of this week, we will send a bulletin.

Outside of that, you’re on your own.

Next Monday, A Jew and His Gold will replace the regularly scheduled A Jew and His Money in order that fellow scribbler Matt McAbby be kept from throwing a tantrum.

And that’s that!

Please stay tuned here for additional editorial changes as we move through the holiday season.

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Today’s propaganda is brought to you by the Carrier Global Corporation (NYSE:CARR), heating and cooling the air you breathe with combustible carcinogens you never imagined could do so much harm!

Have a look at the fundamentals –

  • Price/Earnings is a relatively low (to the overall market) 20.43,
  • Dividend Yield is a nominal 0.84%,
  • Price to Book is a wholly unreasonable 7.38,
  • Earnings per Share over the last year are DOWN 7.80%,
  • The consensus guess for next year’s earnings is a paltry rise of 2.45%, and
  • The company’s Debt/Equity ratio is less than favorable at 1.44.
  • Moreover, insiders have cashed in 20% of their holdings in the last 30 days.

We don’t have faith in the future of the stock, and we’d venture that the Day of Judgment will render a guilty verdict on those still holding through the end of the week.

Have a look now at the daily –

Technically, the picture is negative –

  1. RSI touched the overbought 80 marker a month ago (circled, in red),
  2. And investors have been gun-shy ever since, as seen in the negative divergence from both RSI and MACD (in green).  This is indicative of declining momentum.
  3. Their jitters can also be seen in precipitously declining volume figures, which have fallen from an average six million daily shares traded to four million in just 90 days (in purple).
  4. A rising wedge – which is always bearish (in red) – is the operative price pattern at present.  Should price slip below the lower trendline and short term MA at roughly $56, we’ll likely see the selling carry down to the 137 DMA at $46.
  5. Weekly RSI (not seen here) has also been overbought for the better part of a month, and taken together with the daily overbought read, spells t – r – o – u – b – l – e  with dashes in between.

And it’s for all the foregoing that we now offer the following, finely-crafted options whammy of a bet for your financial dining pleasure.

A Jew and His Money recommends you consider selling the CARR December 17th 55.00/57.50 CALL spread* for a credit of $1.20 (4.70/3.50) and buying the CARR December 17th 52.50/46.00 PUT spread** for $1.20 (1.70/0.50).  Net Zero Premium is the result.

[*Sell the 55 CALL and buy the 57.50 CALL.  **Buy the 52.50 PUT and sell the 46 PUT.]

Rationale: the price point for the trade is perfect.  We pay nothing and “purchase” the opportunity to profit to the tune of $6.50.  That’s our maximum gain.

Our maximum loss is $2.50, should CARR close above $57.50 at expiry.

We start making money when CARR declines to $53.75.

Après ça, la deluge!  

May your Rosh HaShana be filled with purpose and meaning, and may you exit with the blessing of the Holy One and be inscribed in the Book of Life for another year.

!בריאות ופרנסה

With kind regards,

Hugh L. O’Haynew

 

 

2 responses to “Stock Market Hot, Stock Market Cold. Carrier Gets Plug Pulled (CARR)”

  1. Gary Ziols says:

    Carr is down sharp today. Options expire In 3 trading days. Any action required on my part? Wait till friday close and let all expire?

  2. Hugh L. O'Haynew says:

    bs’d
    Howdy do, Gary — thanks for writing.
    The trade cost zilch to initiate and now pays roughly $0.30.
    And that’s only if you leave the short CALL spread in place and don’t buy back the short PUT.
    And we don’t feel great about doing that.
    We’ve a mind to leave it for at least another day and monitor the premiums.
    As of this writing, S&P futures are down, and we should be able to wring a little more from it if CARR follows suit.
    We’re watching close.
    Hope that helps.
    All the best,
    Hugh

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