This Blue-Chip ‘Loser’ Just Might Offer Contrarians a Pleasant Surprise

This Blue-Chip ‘Loser’ Just Might Offer Contrarians a Pleasant Surprise

Josh Enomoto

Tue, September 22, 2026 at 5:21 PM GMT+3 5 min read

• LOW -2.41%

Lowe's Companies (LOW) may be an everyday relevant enterprise but its market value reveals a different story. Since the beginning of the year, LOW stock is down nearly 21%, a victim of a challenging economic environment — particularly a softer-than-expected do-it-yourself demand. To add to the ignominy, LOW also found itself as one of the worst-performing equites within the large-capitalization segment over the past month.

Specifically, the ticker has slipped almost 12% in the past 30 days. The latest surge of red ink has also "earned" LOW stock a 100% Strong Sell rating by the Barchart Technical Opinion indicator. It's safe to say, then, that at a quick glance, Lowe's would appear to be a name to avoid.

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Nevertheless, if you're a contrarian, you may want to give Lowe's stock another look.

A Rare Quantitative Signal Makes LOW Stock Intriguing

While the headline print has naturally focused on the percentage-wise loss of Lowe's stock, the quantitative, state-based framework is arguably more interesting. For the last 10 weekly candlesticks, the ticker has only managed to print two positive sessions, thereby leading to a downward slope across the period in question.

Mathematically, this setup means that within the defined timeframe, 80% of the sessions ultimately landed in the red. I believe that's a significant signal because it first of all changes the perception of LOW stock within the immediate frame. Most people look at the home-improvement giant as a reliable stalwart — and that may be true overall. But right now, it's not true.

Of course, it's not just about changed perceptions. Given that we're in a relatively unique quantitative state, it's natural to believe — if you presuppose that the future is dependent on the material past — that this so-called 2-8-D sequence could alter the probable trajectory of Lowe's stock.

In fact, we know through tabulating all 2-8-D sequences (and their forward 10-week response) going back to January 2009 and creating a composite, forward-looking picture that LOW stock tends to pop higher than normal over the next three to four weeks.

If this trend happens to materialize over these next few weeks, the 190/197.50 bull call spread expiring Oct. 16 could be in play.

Detailing the Bull Spread for Lowe's Stock

For the above spread to be fully profitable, LOW stock would need to trigger the $197.50 second-leg strike price at expiration. If so, the $375 net debit (cash outlay) would generate a maximum (capped) profit of $375, a 100% payout. That may sound reasonable at first glance but you need to consider the odds.

Wall Street's options pricing mechanism pegs the breakeven likelihood at 42% (at $193.75), which isn't terrible but it's not all that enticing, if we're being honest. Even more challenging is the probability to full profitability at $197.50. Here, the odds sit at a modest 33% — a figure calculated by reverse-engineering Barchart's Expected Move calculator.

Obviously, from an expected value perspective, this LOW stock bull spread is a tough sell. Since neither the full-profit nor the breakeven probabilities are above 50%, your portfolio will likely sink if this exact trade were repeated over the theoretical long run.

However, these odds are calculated from a random-walk framework, where the future is essentially independent of the past. In other words, the path that took LOW stock to the time-of-writing price of $190.98 isn't embedded into the equation.

That is one legitimate argument for the future trajectory of Lowe's stock. But there are competing models, some of which involve treating the future as dependent on the past (i.e. a nonrandom walk). Under one such assumption, we're getting different probabilities.

Since we know that the 2-8-D sequence has flashed 30 times on a rolling basis (since January 2009), we can also figure out the exceedance ratio: how many times LOW stock has terminated at a certain price and time period.

From this calculation, we know that around Oct. 9 (one week prior to expiration), LOW has a 46.7% (14 hits out of 30 occurrences) chance to hit $197.50 and a breakeven probability of 60% (18 out of 30).

A Caveat on Likelihood

It's critical to point out that Wall Street is not providing "fake" probabilities and that I'm providing "real" probabilities — that's not the argument I'm making. Rather, the main philosophical point that must be emphasized is that any argument about the unknown future must presuppose a framework to get the argument moving.

And this idea of presuppositions? Everybody does it. When a fundamental analyst talks about "undervalued stocks", this argument presupposes that there is a justified higher valuation that the stock should be. When a technical analyst talks about an imminent "breakout", this argument presupposes that the stock has a higher price to break out to.

What am I presupposing? That an unbalanced order flow may lead to an extractable variance between what would be normally expected versus what might actually happen. I'm using a combination of proprietary programming with Barchart's screeners and data pools to extract what I believe to be the most probabilistically efficient ideas.

I won't always get it right — that's an impossibility. But with data analytics, we can better sniff out potential opportunities. LOW stock just happens to be a compelling idea to consider.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com