The indices waffled a little on Wednesday, but at the end of the day, all four ended up in positive territory. The first phase of the U.S./China trade deal got signed yesterday, but it had little impact on investors it would seem.
The Russell led the way once again and this time it gained 0.77% on the day. The Dow moved up 0.31% and that was good enough for second place. The S&P moved up 0.19% after dipping in to negative territory briefly in the afternoon.
The Nasdaq also dropped in to negative territory in the afternoon, but it managed a last minute rally to close with a gain of 0.08%.Seven of the 10 main sectors moved higher on Wednesday but it was the utilities sector that really stood out.
The sector gained 1.40% on the day.
The consumer staples sector gained 0.71% and the materials sector gained 0.70% as the second and third best performers.
The energy sector dropped 0.69% as the worst performer and it was followed by the financial sector which slipped 0.49%. The consumer discretionary sector lost 0.22% as the third sector in negative territory.
My scans were negative again on Wednesday with 32 names on the bearish list and only nine on the bullish list.
The barometer moved deeper in to negative territory, falling from -8.9 to -17.6.
Today’s trade idea is another bearish one and the company is Equity Residential Property Trust (NYSE: EQR). The stock appeared on the bearish scan last night and its fundamentals are a little better than average. The EPS rating is a 68 and the SMR rating is a C.
EQR has been trending lower since peaking in late October. If we connect the highs from October and November we get a downward sloped trend line that looks like the upper rail of a channel. The stock just hit the rail in the last few days. There is a second layer of resistance from the 50-day moving average.
Buy to open the February 82.50-strike puts on EQR at $2.00 or better. These options expire on February 21. In order for these options to double the stock will need to drop to $78.50. The stock bottomed just below this level in December. I suggest a target gain of 100% with a stop $82.60.
— Rick Pendergraft
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