Stocks were mixed on Wednesday with two indices moving higher and two moving lower. The Dow moved up 0.33% and the S&P gained 0.07%. The Russell fell 0.37% and the Nasdaq dropped 0.05%.
The indices were mostly higher until a report from the Wall Street Journal broke a story that there were issues in the trade talks.
[hana-code-insert name=’adsense-article’ /]The sectors were slightly skewed to the downside on Wednesday with six moving lower and four moving higher.The financial sector was the worst performer on the day, falling 0.70%.
The second worst performance came from the materials sector at -0.58%.
As for the top performers, the utilities sector turned in the biggest gain at 1.48% while the consumer staples sector tacked on 0.76%.
The results of the scans were interesting last night with both the bullish and bearish lists being pretty significant.
There were 46 names on the bullish list and 40 on the bearish list.
The barometer jumped to -5.1 from -19 after these results were added in to the equation.
There were distinct themes to both lists last night. The bullish list was littered with utilities, real estate and materials stocks. The bearish list was made up of primarily tech, consumer discretionary, and healthcare stocks. I chose a name from the bullish list for today’s trade idea and it is the iShares U.S. Real Estate ETF (NYSE: IYR). In addition to appearing on my bullish list, the fund got a bullish signal from the Tickeron Trend Prediction engine and past signals have been successful 81% of the time.
The daily chart shows how the IYR has been trending higher over the past eight months with a trend channel defining the various cycles within the overall trend. The stochastic readings are the lowest they have been in the last nine months and they just made a bullish crossover. Crossovers in April, May, June, and July were good bullish indicators for the fund.
Buy to open the January 90-strike calls on IYR at $2.60 or better. These options expire on January 17. In order for these options to double the fund will need to reach $95.20. The fund peaked at $96 in October, so it won’t have to break to a new high to hit the target. I suggest a target gain of 100% with a stop at $90.50.
— Rick Pendergraft
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