Stocks continued to meander on Tuesday with the indices seeing gains for the most part, but none of the gains were very big. The Dow broke even on the day while the other three main indices moved higher. The Nasdaq moved up 0.26%, the S&P tacked on 0.16%, and the Russell eked out a gain of 0.02%.
Seven of the 10 main sectors moved higher on Tuesday with the healthcare sector leading the way with a move of 0.60%. The materials sector tacked on 0.52% as the second best performer.
[hana-code-insert name=’adsense-article’ /]The energy sector dropped 0.51% as the worst performer.The consumer discretionary sector fell 0.07% and the industrial sector declined 0.01% as the other two sectors with losses.
My scans remained negatively skewed on Tuesday with 37 names on the bearish list and 16 names on the bullish list.
Even though the scans continue to produce negative results, the barometer continues to climb toward the zero level.
The final reading from last night was -19, up from -24.7.
With the overall market meandering without much conviction in either direction these last few days, I feel it is important to maintain some balance between bullish and bearish trade ideas. After two straight bullish trade ideas, today’s is a bearish one and the company is ConocoPhillips (NYSE: COP). The stock appeared on the bearish list last night and the fundamentals are mixed. The EPS rating is a 17 and the SMR rating is a B.
The daily stochastic readings are in overbought territory and made a bearish crossover yesterday, but I felt the weekly chart depicted the downward trend better. We see how the stock has been trending lower for just over a year now with a trend channel forming. The stock just hit the upper rail of the channel. The stock faces resistance from its 52-week moving as well.
Buy to open the January 60-strike puts on COP at $3.65 or better. These options expire on January 17. In order for these options to double the stock will need to fall to $52.70. The stock fell below the $50 level back in August, so it won’t have to break to a new low for our target to get hit. I suggest a target gain of 100% with a stop at $60.
— Rick Pendergraft
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