Todd Gordon's Lowe's Trade

On CNBC's Trading Nation, Todd Gordon of TradingAnalysis.com spoke about recent trading activity in Lowe's Companies, Inc. (NYSE: LOW) and he recommended a bearish position in the name.

He thinks that interest rates are hurting the real estate market and he believes that Lowe's is going to be a casualty in a such environment. Gordon has also analyzed a daily chart on the show and he showed that the stock has been in a well defined up trend recently, but he spotted a pattern that he calls three drives to a high. He explained that after the third move higher, the stock usually pulls back.

Gordon believes that Lowe's is going to drop below its up trend line and he wants to buy the November 67.50/65 put spread for $0.53 to make a bearish trade. The trade breaks even at $66.97 or 7.1 percent lower from the closing price on Thursday. Its maximal profit is $1.97 and Gordon would place a stop loss at $72.50 to protect some of the premium if the stock trades against his position.