Wednesday was an interesting day for stocks. The indices opened lower for a third straight day, but then they rallied back and had pretty decent gains heading in to the final hour. All four indices sold off in to the close and three of the four ended up losing ground.
The Dow managed to hang on to a gain of 0.01% and it was the only one that finished in the green. The Russell fell 0.46% and that was the worst loss of the bunch. The Nasdaq dropped 0.26% and the S&P lost 0.16%.
[hana-code-insert name=’adsense-article’ /]The sectors weren’t a clean sweep to the downside on Wednesday, but six of the 10 did finish lower.Oddly the energy sector and the industrial sector both finished unchanged on the day.
The healthcare sector led the way with a gain of 0.21% and the consumer discretionary sector finished with a gain of 0.03% as the only other sector on the plus side of the ledger.
The utilities sector took the biggest hit with a loss of 1.37% and it was the only sector that saw a substantial loss.
The financial sector suffered the second worst loss at 0.22%.
The difference in size between the bullish and bearish scans closed up last night with a difference of only 10.
There were eight names on the bullish list and 18 names on the bearish list.
The barometer fell to 2.3 from 9.2 once these stats were added in to the equation.
After four straight bullish trade ideas, I have a bearish trade idea for you today. HCA Healthcare (NYSE: HCA) appeared on the bearish list yesterday and the company has mixed fundamental readings. It scores an impressive 90 on the EPS rating, but it doesn’t have an SMR rating because it doesn’t have a return on equity. I checked three different sources and none of the three had an ROE.
HCA has been trending lower since February and it fell below the 50-day moving average in March. The stock attempted to move back above the moving average in April, but failed. It made another attempt last week and failed again. Connecting the highs from the last four months creates a trend line that is just above the 50-day.
Buy to open the June $130-strike puts on HCA at $7.80 or better. These options expire on June 21. In order for these options to double the stock will need to drop to $114.40. The stock won’t have to break to a new low to double, so I suggest a target gain of 100%. I also suggest a stop at $129.00.
— Rick Pendergraft
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