Stocks were mixed on Thursday with two of the four main indices moving lower and two moving higher. All four were in positive territory for most of the day, but selling throughout the afternoon took its toll.
The Nasdaq gained 0.07% while the S&P moved up 0.06 points—points not percent. The Russell dropped 0.43% for the worst loss and the Dow fell 0.19%.
[hana-code-insert name=’adsense-article’ /]The sectors were evenly split with five moving higher and five moving lower on the day.It was a close race for the top performance, but in the end the utilities sector gained 0.47% to beat out healthcare (0.45%) for the top spot.
On the downside, the industrial sector fell 0.51% as the worst performer on the day.
Financials fell 0.46% and the energy sector declined 0.40%.
My scans were negatively skewed once again with 22 names on the bearish list and four on the bullish list.
Even with the negative skew, the barometer continued to move higher and it moved up to -13.3 on Thursday.
There was a theme to the bearish list on Thursday with three different biotech ETFs on the list. After comparing the charts and the options available, I felt a bearish trade on the iShares Nasdaq Biotechnology ETF (Nasdaq: IBB) was the best scenario. It is worth noting that all three of the ETFs had bearish signals generated by Tickeron’s Trend Prediction Engine. Previous signals on the IBB have been successful 85% of the time.
One reason I chose the IBB for this trade was the clean trend channel that has formed over the last six months. The other two had downward sloped trend lines, but not channels. In order for this trade to hit its target, we will need a move similar to the one we saw from early April to mid-May.
Buy to open the December 105-strike puts on IBB at $4.40 or better. These options expire on December 20. In order for these options to double the fund will need to drop to $96.20. The ETF will need to break below the low in May to get to our target, but I think it can get there. I suggest a target gain of 100% with a stop at $106.00.
— Rick Pendergraft
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