All four of the main indices moved higher on Wednesday and after being the biggest laggard over the last few days, it was the Russell that led the way with a gain of 0.96%. The Nasdaq had the second performance with a gain of 0.32% and the Dow logged a gain of 0.20%. The S&P lagged the other indices, but still managed a gain of 0.07%.
The sectors were evenly split on the day with five moving higher and five moving lower. The financial sector led the way with a gain of 0.90% and it was followed closely by the energy sector with a gain of 0.87%.
[hana-code-insert name=’adsense-article’ /]On the downside, the utilities sector was the worst performer with a loss of 1.20% after being the leading sector on Tuesday.The consumer staples sector lost 1.07% as the second worst performer and it was the only other sector to lose over one percent.
The scans came in with a bullish skew for the fifth straight night.
There were 29 names on the bullish list and 14 names on the bearish list.
The barometer slipped from 26.9 to 22.8 on the day.
After four straight bullish trade ideas, today’s is a bearish one. Under Armour (NYSE: UA) was actually on the bearish list on Tuesday, but I liked the bullish trade on American Express better. I was also reluctant to recommend the trade after such a big drop on Tuesday. The company gets a 15 on the EPS rating and a D on the SMR rating.
Under Armour has been trending lower and has formed a trend channel over the last four months. The stock just hit the upper rail of the channel and turned lower. The stock also saw a bearish crossover from the daily stochastic readings out of overbought territory. The last two times it was overbought and experienced a bearish crossover in the stochastics, the stock dropped over 20% and almost 16%.
Buy to open the November $20-strike puts on UA at $2.05 or better. These options expire on November 16. While I normally suggest a target gain of 100%, on this trade I suggest a target of 70%. The stock will need to get down to $16.50 and that is below the lower rail at this time, but I think the lower rail will be down at that level in a few weeks. I suggest a stop at $19.80.
— Rick Pendergraft
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