Once again on Wednesday we saw stocks open higher only to slide in to negative territory as the day went on. All four of the main indices dropped on the day and the Nasdaq suffered the worst loss at 0.90%. The Dow dropped 0.81% and the S&P lost 0.76%. The Russell had the best performance but still lost 0.58%.
Nine of the 10 of the main sectors declined on the day with communication services being the only one to notch a gain at 0.45%.
[hana-code-insert name=’adsense-article’ /]The second best performer was the materials sector with a loss of 0.17%.The biggest drop came from the financial sector at 1.27%.
The tech sector lost 1.23% and the utilities sector lost 1.07% as the only other two to lose over one percent.
My scans flipped to a bullish skew last night with 31 names on that side of the ledger and 17 on the bearish side.
The barometer rose from -81.3 to -42.4 as a result of the bullish bias.
The one name on the two lists last night that stood out was the SPDR Gold Shares (NYSE: GLD). The fund has been trending higher and with stocks being so volatile, investors could seek safe havens to park assets and gold has traditionally been one area that benefits from falling equity prices.
The chart shows how the fund hit a low in August and the rallied slightly before hitting resistance at its 50-day moving average. It moved above the 50-day in early October before the recent dip dropped it back below the trendline. Yesterday’s bounce took the fund back above the 50-day and I view that as a good sign.
Buy to open the January 2019 $113-strike calls on GLD at $3.35 or better. These options expire on January 18. The fund will double if the fund hits $119.70 and that is only 4.4% from where it closed yesterday. I suggest a target gain of 100% with a stop at $113.30.
— Rick Pendergraft
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