The results for the indices were mixed again on Thursday with three finishing higher and one finishing lower, but once again the discrepancy in the returns was pretty wide. The Dow led the way with a gain of 0.42% and it was followed by the S&P which was up 0.16%. The Nasdaq notched a small gain of 0.02% while the Russell fell 0.12%.
Seven of the sectors moved higher on Thursday while three moved lower. The industrial sector was far and away the leading sector with a gain of 1.15%. The next best performance was the tech sector with a gain of 0.28%.[hana-code-insert name=’adsense-article’ /]The energy sector was the worst performer with a loss of 0.47% and it was followed by the financial sector which declined by 0.29%.
The consumer discretionary sector was the third one in the red and it was only down 0.03%.
My scans were less negative on Thursday than they had been in the three previous sessions.
There were 38 names on the bearish list and 23 on the bullish list.
The barometer moved up a little once these results were added in to the equation, rising from -45.1 to -37.9.
The barometer has been in negative territory for 13 straight days now.
Today’s trade idea came from the bearish list and it is on Keycorp (NYSE: KEY). The company’s aren’t bad with an EPS rating of 73 and an SMR rating of a B, but the chart was more compelling to me. Plus the company reported earnings on Thursday and they came up short on both the EPS estimate and the revenue estimate.
KEY has been trending lower since the fall and there is a trend line connecting the highs. The stock hit this trend line on Wednesday and then fell on Thursday after the earnings miss. Personally I think there is more downside than just the one day of selling.
Buy to open the June $18-strike puts on KEY at $1.55 or better. These options expire on June 21. In order for these options to double the stock will need to drop to $14.90. The stock fell to a low of $14.82 in March, so it won’t have to break to a new low. I suggest a target gain of 100% with a stop at $17.25.
— Rick Pendergraft[hana-code-insert name=’sa-article’ /]