Stocks were mixed again on Tuesday only this time the tables were reversed. Three indices moved higher while the Russell fell by 0.40%. Oil prices dropped back down as Saudi Arabia announced progress in getting production back online much faster than anticipated.
The Nasdaq led the indices on the day with a gain of 0.40% and it was followed by the S&P which moved up 0.26%. The Dow logged a gain of 0.13% after being in negative territory for most of the day but managed to rally in the final hour.
[hana-code-insert name=’adsense-article’ /]Seven of the 10 sectors moved higher, one was unchanged, and two sectors fell on Tuesday.The utilities sector moved up 0.87% to lead the way and it was followed closely by the materials sector with a gain of 0.81%.
The financial sector was the one that was unchanged while the energy sector fell 1.39% and industrials dropped by 0.05%.
My scans ended their string of negative readings, but they didn’t start a new string of positive readings.
The results were dead even— 14 names on each side.
Because of the neutral reading, the barometer moved up from -67.6 to -42.2.
With an even split between the bullish and bearish lists, I entered the analysis process completely unbiased. What I found was one stock on the bullish list that stood out more than any other and that stock was Zoetis (NYSE: ZTS). The company has great fundamental readings with a 94 on the EPS rating scale and an A on the SMR rating system.
We see on the chart that the stock has been trending higher since December and really since mid-2017. A trend channel has formed over the last five months and the stock just hit the lower rail this week. The lower rail is also in close proximity to the 50-day moving average giving the stock two layers of support. The daily stochastic readings reached oversold territory and made a bullish crossover yesterday.
Buy to open the November 120-strike calls on ZTS at $6.60 or better. These options expire on November 15. In order for these options to double the stock will need to reach $133.20. That is above the recent high, but the upper rail should be above that target price in the coming weeks. I suggest a target gain of 100% with a stop at $119.50.
— Rick Pendergraft
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