Stocks finished mixed on Monday, with a huge discrepancy between the sectors creating a big difference in the index performances. The main reason for the discrepancy was the story about possible antitrust probes of Alphabet, Amazon, and Facebook. This sent big tech stocks reeling.
The four main indices finished split, but the Nasdaq got drilled as a result of the tech decline. The tech-laden index fell 1.61% on the day. The S&P was also in negative territory with a loss of 0.28%. The Dow managed a modest gain of 0.02% while the Russell tacked on 0.03% and that was good enough to be the best performer of the four on Monday.
[hana-code-insert name=’adsense-article’ /]The sector activity was odd given the way the indices performed.Of the 10 main sectors, seven moved higher on the day.
The materials sector led the way with a gain of 3.15% and that was the clear winner on the day.
There were three other sectors that finished with gains over one percent and they were led by the energy sector which gained 1.43%.
The communication services sector was the worst performer on Monday with a decline of 3.21%.
The tech sector fell 1.77% and the consumer discretionary sector was the third one in negative territory with a drop of 0.88%.
My scans became more bullishly skewed Monday night with 85 names on the bullish list and only four on the bearish side.
The barometer jumped up to 62.9 from 46.2 once these results were taken in to account.
With all of the bullish names to choose from, today’s trade idea is a bullish one. The Consumer Staples Select Sector SPDR (NYSE: XLP) was on the bullish list and there were a great number of stocks from the sector that were on the bullish list. It also helped that the Tickeron Trend Prediction Engine just generated a bullish signal on the XLP on Friday.
I constructed the chart a little differently on this one. First I connected the highs to form the upper rail and then drew a parallel line to see where a lower rail would fit. The stock didn’t quite get down to the lower rail, but I couldn’t help but notice the last few bullish crossovers from the stochastic readings. These have been pretty strong signals for the XLP.
Buy to open the July 55-strike calls on XLP at $2.05 or better. These options expire on July 19. In order for these options to double the ETF will need to reach $59.10. The upper rail of the channel will be well above that level in the next week or two. I suggest a target gain of 100% with a stop at $55.40.
— Rick Pendergraft
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