All four of the main indices dropped on Thursday as geopolitical events caused investors to take a more cautious approach. The Nasdaq took the worst hit with a loss of 2.06% and it was followed by the Russell with a loss of 1.82%. The S&P logged a loss of 1.44% and the Dow lost the least with a loss of 1.27%.
Nine of the 1o main sectors fell yesterday with the utilities sector being the lone on in positive territory with a gain of 0.17%.
[hana-code-insert name=’adsense-article’ /]There were seven sectors that lost over one percent and the worst of the bunch was the tech sector with a loss of 1.96%.The consumer discretionary sector was the second worst performer with a decline of 1.92%.
My scans dropped in sharply in terms of the number of signals produced.
There was only one stock on the bullish list last night and there were only three on the bearish list.
The barometer dropped from 100.8 to 50.4 as a result of the slight bearish skew.
After five straight bullish trade ideas, today’s is a bearish one. L Brands (NYSE: LB) appeared on the bearish list and the company has very poor fundamentals. The EPS rating is a 26 and the company doesn’t even have an SMR rating because it doesn’t have a return on equity.
The chart on LB is an interesting one. The stock gapped lower in February and if we connect the high from the day with the high from July it forms a downward sloped trendline. The stock has been hovering near that trendline for the past week and wasn’t able to break through it even as the market soared on Tuesday.
Buy to open the November Week 5 $32.50-strike puts on LB at $3.30 or better. These options expire on November 30. These options will double if the stock drops to $25.90. The low on September 5 was $25.89 and that makes that a possible support level. I suggest a target gain of 100%, but don’t get caught up on an exact target just in case. I suggest a stop at $32.00.
— Rick Pendergraft
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