Price action recently is sideways and slow. Volumes are dipping over the last week, a pre-Labor Day, seasonal trading pattern. Next week brings PCE data and the Jackson Hole meeting, both able to move the market, plus options expiration on Friday. Even with mild weakness lately, sector rotation continues and some sectors keep outperforming.
The three names below sit outside the roughly 50 stocks discussed daily, so they get less attention.
Parker Hannifin (PH)
The company is spread across the industrial sector: aerospace, industrial machinery, and infrastructure support. It drives much of the country's activity and has a global reach. The stock has shown steady upward momentum. Earnings on August 6th pushed it higher with a gap up, but it has since drifted back down.
The trade: Sell the 990 put for about $15 (a bit cheaper now, since the stock came off its low). The plan is to collect premium and possibly get put into the stock after it fills the earnings gap, then hold longer term if support forms.
Technicals: Break-even is roughly 975, which lines up with a low point seen before the gap. Highs hit just shy of 1100 recently, then the stock moved into a downward channel between two trend lines. It is now close to filling the gap formed near 1010, a notable level - gaps often fill, though it is not guaranteed. 997 stood out as a high that price repeatedly failed to break above in recent months. A low near 1056 held a couple of times before a breakdown. The upward-sloping trend line (blue) still holds; price is getting close to it, another possible breakdown point for bears. Price sits right on the 21-day EMA near 1022, with the 5-day EMA at 1035 just above, and the 63-day (one quarter, gold) at 997. RSI is trending lower and sits below its green momentum trend line; a slip below the 50 midline would add a bearish tilt. Volume profile shows nodes near 1055-1078 and around 970.
DexCom (DXCM)
The stock was pounded over the last year and a half to two years. The worry was that GLP-1 drugs would cut demand for insulin pumps below what was first expected. It has now found its footing. Longer term, its position in the medical device and insulin delivery area looks strong, and the pumps could be used for other purposes ahead. The stock is rebounding and should find more upside.
The trade: A buy-write. Buy the stock and sell the January 100 call for about $5.80. That gives about a 17% capture zone to the upside over the next four months plus an exit point, and it lowers the break-even if the stock does not reach that level next quarter.
Technicals: Largely rangebound this year between about 54 and 80. After earnings, a gap up moved it into an upward channel. It topped at 91.96 a couple of times without breaking through. Relative lows come in near 88 and 82; a set of highs near 79 was never tested. Today's candle is on pace to form a bullish engulfing pattern, where the green candle's body fully covers the prior day's smaller red candle. To confirm, price must hold into the close and follow through with a second up day. The 5-day EMA at 89.83 has been supportive; other moving averages sit far below, showing the strength of the recent trend. RSI shows bearish divergence - price made higher closes while RSI trended down and backed out of overbought. This does not signal a collapse; it means the pace of gains is slowing, possibly a consolidation before the next leg up. Watch for breakouts to set direction. Over the past three months, volume nodes stand out near 84, 85, and 90.
Union Pacific (UNP)
The transportation sector stands out. Transport will keep evolving, and with oil prices holding at these levels, there is potential for a shift toward railroads, including possible electrification of railroads over coming decades. That could bring railroads back into favor as a delivery method. Union Pacific is the leader here; Southern is another option but its chart is less impressive. The stock is already up from when this trade was structured.
The trade: Buy the September 300/315 call spread (29 days out) to capture a push back toward recent highs, and sell the 290 put to finance a large part of the call spread. This gives a big upside capture zone with short-dated exposure, plus the chance to get put into the stock if it weakens over the next month.
Technicals: Up 45% off the 52-week lows, a strong longer-term move. After earnings it was rangebound with a jump up but little net movement until mid-to-late June, then a steep climb into highs near 315.99. Price pulled back and solidified around 286, lining up with an old high and a later low. The downward-sloping trend line off the highs (blue) has broken, and price is forming a channel again; today's candle is pushing above the upper channel line and near the previous day's high. Another bullish engulfing candle is forming, more pronounced than DexCom's because yesterday's body was very narrow. Downside levels: 293 and 286. Upside: a break above 308 would be notable, then 316. The 5-day EMA is at 301.52, the 21-day just shy of 296. RSI is making new relative highs but has not broken into overbought yet. The downward-sloping red trend line broke, suggesting improving momentum. The volume node at 291-297 is the heaviest trading area near current price and the place to watch for support.
