All four of the main indices followed the same pattern on Friday. They all opened in positive territory and then trended lower throughout the day. By the end of the day all four finished in the red.
The Nasdaq finished with the worst loss at 0.74% and it was followed by the S&P with a drop of 0.62%. The Russell was in positive territory until late in the day on Friday, but finished with a loss of 0.5%. The Dow took the smallest loss at 0.25%.
[hana-code-insert name=’adsense-article’ /]Seven of the 10 sectors moved lower once again—those were the same numbers from Thursday.The utilities sector took the worst loss at 1.42%.
The communication services sector fell 1.29% and the healthcare sector dropped 1.04%.
Those were the only sectors that lost more than 1.0%.
The industrial sector gained 0.55% to lead the way and it was followed closely by the energy sector with a gain of 0.5%.
The materials sector moved up 0.22% and was the only other sector in the black.
My scans were actually positively skewed on Friday night and that was a bit of a surprise. There were 25 names on the bullish list and 21 on the bearish side.
The barometer moved up to -23.3 from -39.3 once these figures were added in to the equation.
There was a clear theme to the bullish list as 16 of the 25 stocks and ETFs were associated with the energy sector. As a result of that information, today’s trade idea is a bullish one on Royal Dutch Shell Class A Shares (NYSE: RDS/A). The fundamental ratings are mixed with an EPS rating of 30, but an SMR rating of a B. It was the chart that really got my attention though.
We see that a trend channel has formed over the last four months and the stock just hit the lower rail of the channel. The lower rail connects the lows from March, early May, and late May. The daily stochastic readings are in oversold territory and just made a bullish crossover. The indicators made bullish crossovers after each of the lows mentioned above as well.
Buy to open the October 62.50-strike calls on RDS/A at $2.45 or better. These options expire on October 18.In order for these options to double the stock will need to reach $67.40. Given the 90 days until expiration, the upper rail will be well above the $67.50 level before these options expire. I suggest a target gain of 100% with a stop at $62.75.
— Rick Pendergraft
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