After the massive selloff on Friday and a rough start to the Sunday session for futures, President tweeted that talks with China were back on and that settled the nerves of investors. Stocks soared on this news and all four indices experienced solid gains.
The Nasdaq led the way with a gain of 1.32%. The S&P moved up 1.10% for the second best move and the Dow tacked on 1.05%. The Russell lagged the others with a gain of 0.93%.
[hana-code-insert name=’adsense-article’ /]All 10 sectors moved up on Monday with six gaining at least one percent.The communication services sector jumped 1.52% for the top performance and it was followed by the tech sector with a gain of 1.39%.
The materials sector got hit hard last week and it lagged again on Monday with a gain of 0.31%.
The energy sector moved up 0.45% and that was the second smallest gain.
I was a little surprised by my scans given the big moves to the upside.
The results showed 19 names on the bearish list and nine on the bullish list.
The barometer inched up a little even with the negative skew to Monday’s results. The final reading was -33.6 after a reading of -41.5 on Friday.
With only 28 stocks on the lists collectively, there were only a few stocks that caught my eye. The one stock that stood out was Seagate Technology (Nasdaq: STX) and it was on the bearish list. The company’s fundamentals are poor with an EPS rating of 25 and an SMR rating of a C.
The stock has been waffling back and forth over the last five months and hasn’t really gone anywhere. There is a trend line that connects the highs from early July and mid-July and the stock is hovering right below it currently. The daily stochastic readings hit overbought territory and made a bearish crossover last night. Past bearish crossovers from the indicators have been pretty good signs for downward moves.
Buy to open the October 47.50-strike puts on STX at $2.95 or better. These options expire on October 18. In order for these options to double the stock will need to drop to $41.60. That price is slightly below the low from early August, but not by much. I suggest a target gain of 100% with a stop at $48.00.
— Rick Pendergraft
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