Stocks gained ground again on Wednesday, but the gains were far smaller than what we saw on Tuesday. The FOMC left rates where they are and by some indications we might not see a rate cut as soon as some investors thought.
The Nasdaq led the indices on the day with a gain of 0.42%. The Russell and S&P gained slightly less with gains of 0.35% and 0.30%, respectively. The Dow lagged the other indices, but still moved up by 0.15%.
[hana-code-insert name=’adsense-article’ /]Looking at the sector performance, the numbers weren’t nearly as bullish on Wednesday as six moved higher and four moved lower—eight moved higher on Tuesday.The healthcare sector led the way with a gain of 0.90% and the utilities sector tacked on 0.76% to finish with the second best gain.
As for the sectors that moved lower, the materials sector saw the biggest loss at 0.55%.
The financial sector fell 0.18% and that was the second worst performance.
My scans stretched their stretch of negative readings to nine days last night.
There were 30 names on the bearish list and eight on the bullish side. The difference of 22 is the smallest negative difference during the nine-day stretch.
The barometer edged up a little, moving from -35.9 to -32.2.
Once again I have a bearish trade idea for you today. None of the charts for the stocks on the bullish list stood out. The chart and fundamental combination of Farfetch (NYSE: FTCH) stood out to me. The company gets a 21 on the EPS rating and a D on the SMR rating.
The stock has been trending lower for the last three and a half months and a trend channel has formed. The stock is hovering just below the upper rail right now and it hasn’t been able to move above the 50-day moving average. The daily stochastic readings are in overbought territory and made a bearish crossover yesterday. The last two bearish crossovers for the stochastics have been strong bearish signals.
Buy to open the July 24-strike puts on FTCH at $2.00 or better. These options expire on July 19. In order for these options to double the stock will need to reach $20. The stock dipped below $19 earlier this month, so it won’t have to break to a new low for the options to hit our target. I suggest a gain of 100% with a stop at $23.50.
— Rick Pendergraft
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