Stocks were mixed once again on Thursday with three sectors experiencing slight declines while the S&P notched a small gain of 0.08%. The Nasdaq dropped 0.04% and that was the worst loss of the day. The Russell dropped 0.02% and the Dow fell 0.01%. The losses were much worse in the early going, but stocks rallied in the afternoon to pare them.
Seven of the 10 main sectors moved higher on the day and they were led by the materials sector with a gain of 0.62%.
[hana-code-insert name=’adsense-article’ /]The communication services sector registered the second best gain at 0.45%.The energy sector dropped 0.27% as the worst performer on Thursday while the tech sector (-0.12%) and the consumer staples sector (-0.03%) joined it in the red.
The scans flipped back to a negative skew last night with 22 names on the bearish list and 12 on the bullish side.
The barometer dropped slightly, falling from -5.1 to -6.7.
With the relative balance between the lists, I had a hard time choosing today’s trade idea, but in the end it was a bullish idea on Activision Blizzard (Nasdaq: ATVI) that won out. The company gets an EPS rating of 61 and an SMR rating of a B.
Activision has been trending higher in the last five months and a trend channel has formed. The stock just hit the lower rail of the channel and looks poised to bounce. The stochastic readings are in oversold territory and made a bullish crossover. We saw a similar move back in August before a huge jump in the stock.
Buy to open the January 52.50-strike calls on ATVI at $2.85 or better. These options expire on January 17. In order for these options to double the stock will need to reach $58.20. The stock will need to break to a new 52-week high, but the rally from mid-August to mid-September was incredible. I suggest a target gain of 100% with a stop at $51.40.
— Rick Pendergraft
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