Stocks came under some selling pressure on Friday after the December employment report came up short of estimates. All four of the main indices fell while gold and treasuries rallied.
The Dow took the worst loss at 0.46% and it was followed closely by the Russell which was down 0.44%. The S&P fell 0.29% on the day and the Nasdaq dropped 0.27%.
Eight of the 10 sectors fell on Friday.The utilities sector moved up 0.26% and the healthcare sector tacked on 0.03% as the only two to finish in the black.
The financial sector was the worst performer with a drop of 0.74%.
The sector while be in the spotlight this week as big banks are set to kick off earnings season on Tuesday.
The industrial sector took the second worst loss on Friday at 0.71%.
My scans were relatively balanced on Friday with 20 names on the bearish list and 13 on the bullish side.
The barometer inched up to -4.3 from -5.5 on Thursday.
The one trade set up that stood out the most to me was on Host Hotels & Resorts (NYSE: HST). The stock appeared on the bullish list and it has solid fundamental ratings. The company scores an 88 on the EPS rating scale and it gets a B in the SMR rating system.
Looking at the chart we see that the stock has been climbing since mid-August and a trend channel has formed that defines the various cycles within the overall trend. The stock just hit the lower rail of the channel and seems to be using the 50-day moving average as support as well.
Buy to open the February 17-strike calls on HST at $0.85 or better. These options expire on February 21. In order for these options to double the stock will need to reach $18.70 and that is right where the stock peaked in late December. I suggest a target gain of 100% with a stop at $17.20.
— Rick Pendergraft