For the third time in the last four days, all four of the indices moved higher on Wednesday. The Nasdaq led the way with a gain of 0.99% and it was followed by the S&P with a gain of 0.57%. The Russell recorded a gain of 0.43% and the Dow brought up the rear with a gain of 0.23%.
Nine of the 10 sectors moved higher yesterday with the financial sector (-0.03%) being the lone group in the red. The consumer discretionary sector gained 1.13% as the leading performer.[hana-code-insert name=’adsense-article’ /]The tech sector notched a gain of 0.87% as the second best performer and the materials sector (0.72%) finished third.
My scans continued to produce lower total numbers and this is the fourth straight night with less than 30 stocks combined between the two lists.
Last night showed nine names on the bullish list and 15 on the bearish side.
The barometer moved slightly higher and ended at -6.1.
After three straight days of bullish trade ideas, I have a bearish trade idea for you today.
The stock is Finisar (Nasdaq: FNSR) and the fiber optics company has poor fundamentals. The EPS rating from IBD is at 24 and the SMR rating is a D. The company saw both earnings and sales decline in the most recent quarter.
The company is expected to announce earnings next Thursday, September 6, so this trade idea carries a little more risk and should be treated accordingly. We see on the chart that the stock has been rising, but is now facing resistance in the $20.50 range. The stock stalled there in March and then dropped sharply over the next three weeks.
Buy to open the Oct18 $22-strike puts on FNSR at $2.40 or better. These options expire on October 19. I am expecting another big drop like we saw in March, but we only need a drop down to the $17.20 area for these options to double in price. I suggest a target gain of 100% and a stop at $21.
— Rick Pendergraft[hana-code-insert name=’wyatt-article’ /]