Stocks opened in the red on Thursday and remained there for the better part of the day, but a late afternoon rally lifted the indices to gains. All four ended up in the black on the day. The S&P led the way with a gain of 0.36% and it was followed by the Russell with a gain of 0.31%. The Nasdaq had the third best gain at 0.27% and the Dow only managed to move up by 0.01%.
Seven of the 10 sectors moved higher on the day and it was the utilities sector that led the way with a gain of 0.86%. The tech sector had the second best move with a gain of 0.78% and it was followed closely by the financial sector which moved up 0.75%.
[hana-code-insert name=’adsense-article’ /]The communication services sector was the worst performer on the day with a loss of 0.81%.The sector was hurt by Netflix which lost 10.27% on the day after seeing a decline in U.S. subscribers.
The consumer discretionary sector fell 0.11% and that was the second worst performance.
My scans remained bearishly skewed on Thursday, but the differential between the two lists was much smaller.
There were 23 names on the bearish side and eight on the bullish side.
The barometer edged up a little after adding these results in to the equation and the final reading was -39.3.
I hate to make four straight bearish trade ideas, especially given the reversal yesterday, but there just weren’t any setups that I liked on the bullish list. The one setup that jumped out to me the most was Abercrombie & Fitch (NYSE: ANF). The stock was on the bearish list and the company’s fundamentals aren’t that great. The EPS rating is a 33 and the SMR rating is a D.
What we see from the chart for Abercrombie is a falling 50-day moving average just overhead that should act as resistance. There is also potential resistance at the $19.50 area which was support back in February. That area also marked the top of the bar when the stock gapped lower in May.
Buy to open the September 20-strike puts on ANF at $2.65 or better. These options expire on September 20. In order for these options to double the stock will need to drop to $14.70. That price is right at the low from June so it won’t have to break to a new low. I suggest a target gain of 100% with a stop at $19.60.
— Rick Pendergraft
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