The market continues to get bounced around by the latest news on the trade war between China and the U.S. Wednesday saw stocks rally as some positive news came out ahead of the talks that are scheduled to start today.
All four of the main sectors moved higher on the day, but they didn’t quite make up all of the losses from Tuesday. The Nasdaq led the way with a gain of 1.02% and it was followed by the S&P with a move of 0.91%. The Dow tacked on 0.70% and the Russell lagged slightly with a gain of 0.47%.
[hana-code-insert name=’adsense-article’ /]All 10 main sectors moved higher yesterday, but there were two that stood out.The tech sector gained 1.49% and the materials sector jumped 1.12% and those were the only two that gained over 1.0%.
The utilities sector experienced the smallest gain at 0.48% and it was followed by the communication services sector which gained 0.60%.
Those were the two smallest gains of the bunch.
My scans produced another negative result last night with 19 names on the bearish list and only five on the bullish list.
The barometer dropped sharply once again, falling from 53.9 to 17.7.
There were only two stocks that really jumped out at me from the two lists, one on the bullish side and one the bearish side. In the end I liked the set up better for the one from the bearish list and that was Okta, Inc. (Nasdaq: OKTA). The company gets a 23 on the EPS rating and a D on the SMR rating.
Okta had been rallying nicely until July and then the stock started rolling over and fell below the $100 mark back in September. The stock has since rallied, but it is overbought and it is facing resistance from its 50-day moving average. I look for the stock to drop back down in the coming weeks.
Buy to open the November 120-strike puts on OKTA at $8.30 or better. These options expire on November 15. In order for these options to double the stock will need to drop to $103.40. This target range is right in the middle of where the stock consolidated in September. I suggest a target gain of 100%. If the stock closes above the 50-day, I would suggest shutting the trade down.
— Rick Pendergraft
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