The enthusiasm for the announced deal between China and the U.S. dwindled quickly as details began to emerge and there were some cautious statements from the Chinese side. Investors appeared to take a step back on Monday and became a little more cautious as a result.
The main indices all dropped on Monday, but the losses were pretty minor. The Russell suffered the worst loss at 0.43% and that was three times the size of any of the other losses. The S&P fell 0.14%, the Dow declined 0.11%, and the Nasdaq lost 0.10%.
[hana-code-insert name=’adsense-article’ /]Nine of the 10 main sectors fell on the day with the financial sector being the lone one to move higher with a gain of 0.14%.Three sectors lost less than 0.10%.
The materials sector dropped 0.71% and that was the worst performance on Monday.
Utilities fell 0.64% as the second worst performer and the consumer staples sector dropped 0.46%.
After the big positive reading on Friday, my scans were rather muted on Monday.
There were only nine stocks on the bullish list and only five on the bearish side.
The barometer fell from 42.2 to 34 once these results were added in to the equation.
Despite the low numbers on each side, there were five different sectors represented on the bullish side and the bearish side was made up of stocks from four different sectors. In the end it was another utility that got my attention the most. Ameren (NYSE: AEE) appeared on the bullish list and it was the chart that got my attention. The EPS rating is above average at 68, but the SMR rating is average with a C.
We see that the stock has been moving higher with a trend channel forming over the last six and a half months and the stock just hit the lower rail of the channel. The stochastic readings are in oversold territory and just made a bullish crossover. We see similar patterns in April, June, and September. All three instances saw the stock rise, but the moves in April and September were much bigger moves.
Buy to open the December 75-strike calls on AEE at $3.30 or better. These options expire on December 20. In order for these options to double the stock will need to reach $81.60. When the signal came in April, the stock gained over 10% in approximately a month and a half. The September signal saw the stock jump over 10% in just over two weeks. A 10% jump this time would put the stock up above the $83 level. I suggest a target gain of 100% with a stop at $75.50.
— Rick Pendergraft
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