A Trade Building in USG

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Home Depot ($HD) reported strong earnings and raised their forecast for future earnings. Wednesday morning Lowes ($LOW) will report on their earnings. The strength of these two companies has been phenomenal. In fact it gets one looking at casting a wider net for stock performance. And there is another company in that sector that looks ready to outperform, USG ($USG).

USG makes the stuff that Home Depot and Lowes sell, for those of us that actually have the talent to go and build something from scratch. The chart of the company’s stock price shows it went through a rough 6 month span ending in January. But since then it looks as good as the market segment it sits in.

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After making a bottom in January the stock has gone straight up. It peaked on the day it reported earnings, April 21 and then pulled back slightly into the end of the month. As May started it reversed back higher and is holding at resistance at 28.70. Momentum is bullish, with the RSI in the bullish zone and the MACD crossing up and positive. There was also a Golden Cross printed a week ago.

A push above resistance is the trigger to own the stock. Sized to a stop loss at 26, the dip low it offers a good reward to risk. But since it does not pay a dividend, you might consider using the June 28 Calls to limit risk to less than $1.50 per share.

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