The four main indices all moved higher on Monday with the Russell (+0.62%) and the Nasdaq (+0.61%) leading the way. The S&P logged a gain of 0.35% and the Dow lagged the others with a gain of only 0.16%.
Nine of the 10 main sectors moved higher for the second straight day. The one sector in the red yesterday was the materials sector with a loss of only 0.02%. On the plus side, the telecom sector led the way with a gain of 1.36% and that was far and away the best performance.[hana-code-insert name=’adsense-article’ /]The consumer discretionary sector was the second best performer with a gain of 0.65% and the tech sector was third with a gain of 0.56%.
My scans were dead even last night with 16 stocks on both the bullish list and the bearish list.
The barometer dropped to 10.2 from 14.2 once these results were added in.
Interestingly each list had one sector that accounted for seven of the 16 names.
On the bullish list it was the consumer discretionary sector and on the bearish list it was the financial sector.
The one stock that stood out the most was on the bearish list and it was Nektar Therapeutics (Nasdaq: NKTR). The biotech firm scores a 13 on the EPS rating from Investor’s Business Daily and it scores a D on the SMR rating. The company has seen sales decline over the last three years and it has lost money in three of the last four quarters. The company is set to announce earnings on Wednesday, so this trade idea carries more risk than usual.
The stock has been declining since early March. The stock rallied back in May with the stock moving up to its downward trending 50-day moving average. Looking at the chart today we see a similar pattern. The stock has rallied up to its 50-day moving average, only this time it is ahead of the earnings report.
Buy to open the Sep18 $55-strike puts on NKTR at $4.50 or better. These options expire on September 21. There is a big gap between the bid and ask on these options so I suggest trying to buy them between the two prices. The stock will need to drop to $46 for these options to double and I would suggest that as a target. I would also suggest a stop at $58. Remember, this is a riskier trade idea than usual.
— Rick Pendergraft[hana-code-insert name=’TOD webinar’ /]