Futures were indicated sharply higher on Sunday evening and the indices opened with strong gains on Monday morning. The gains did get pared considerably during the afternoon, but all four still finished with solid gains.
The Nasdaq was the top performer with a gain of 1.06% and it was followed by the S&P with a gain of 0.77%. The Dow moved up 0.44% and the Russell lagged the others but still gained 0.20%. The Russell was the only one of the four that actually moved in to negative territory in the afternoon.
[hana-code-insert name=’adsense-article’ /]Nine of the 10 main sectors moved higher again on Monday, only this time it was the utilities sector that moved lower with a drop of 0.20%.The tech sector led the way with a gain of 1.59% and it was followed by the financial sector which moved up 1.23%.
Those were the only two sectors that moved up more than one percent.
My scans turned in a third straight bullish skewed result, but the difference between the two lists did fall slightly.
There were 34 names on the bullish list and 14 on the bearish side of the equation.
The barometer continued to move up and finished Monday with a reading of 25.5.
After three straight bullish trade ideas, I have a bearish trade idea for you today. The iShares MSCI South Korea Capped ETF (NYSE: EWY) appeared on the bearish list last night and there are some fundamental factors at work that could potentially hurt the South Korean market for the next few weeks. The progress made in the trade war could have an adverse effect on South Korea’s tech companies and the possibility of more peace talks with North Korea could have an impact as well.
We see on the chart that the fund saw support in the $60.25 area back in March on two separate dips. The fund fell below the support in May and seems to be having trouble there now. We see it many times where former support becomes resistance on the first attempted rebound attempt.
Buy to open the August 61-strike puts on EWY at $2.35 or better. These options expire on August 16. In order for these options to double the fund will need to reach $56.30. This is well above the low in May, so I don’t see technical support being an issue. I suggest a target gain of 100% with a stop at $60.35.
— Rick Pendergraft
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