The market got hit with some selling on Friday and the indices all finished in the red, and most of them saw the losses worsen in to the close. The Nasdaq took the biggest loss at 0.80%, the Dow fell 0.59%, and the S&P dropped 0.49%. The Russell was the only one that didn’t see the losses get worst in the final hour, but it still finished with a loss of 0.11%.
Seven of the 10 main sectors lost ground on the day with the tech sector and the consumer discretionary sector turning in the worst losses. Tech stocks dropped 1.17% while the consumer discretionary sector fell 1.15%. No other sector fell more than 1%.
[hana-code-insert name=’adsense-article’ /]The healthcare sector led the way on Friday with a gain of 0.56% while the utilities sector gained 0.40% for the second best performance.The energy sector gained 0.08% and was the third sector in the black on the day.
My scans continued to produce negative readings on Friday with 17 stocks on the bearish list and only one on the bullish list.
The barometer was little changed once these results were added in to the equation with a final reading of -13.2 on Friday after a reading of -13.3 on Thursday.
Believe it or not, even though there was only one stock on the bullish list on Friday, today’s trade idea is a bullish one. Oracle (NYSE: ORCL) was that lone stock on the bullish list and I like both the chart and the fundamentals. The company gets an 82 on its EPS rating and it gets an A in the SMR rating system.
What we see on the chart is that the lows from the last three and a half months connect nicely in a trend line. The stock just hit that trend line this past week and it moved higher after it did. We also see that the stochastic readings were approaching oversold territory but didn’t make it and have now made a bullish crossover. I also took notice of how the lows in the stochastic readings have been trending higher.
Buy to open the November 52.50-strike calls on ORCL at $2.25 or better. These options expire on November 15. In order for these options to double the stock will need to reach $57—at least from an intrinsic value. That level is slightly higher than the high from earlier in September, but not as high as back in July. I suggest a target gain of 100% with a stop at $52.00.
— Rick Pendergraft
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