Stocks were mixed on Wednesday with two indices moving higher and two moving lower. The Nasdaq led the way with a gain of 0.95% and it was joined in positive territory by the S&P with a move of 0.50%.
The Russell suffered the worst loss at 0.60% while the Dow dropped 0.30% as the other index in the red.
Seven of the 10 main sectors moved higher and three moved lower. There were two sectors that really stood out among the rest. The communication services sector jumped 2.46% on the day and the utilities sector gained 2.37%. The consumer discretionary sector (+1.06%) was the only other sector to gain more than 1.0%.
The energy sector fell 2.46% and that was by far the worst performance on the day. The financial sector dropped 0.86% and the industrial sector lost 0.41%.My scans saw a significant decline in bullish signals on Wednesday, but they remained positively skewed. There were 22 bullish signals and six bearish signals.
The barometer fell a little as the big readings from Monday and Tuesday drop in their importance. The final reading last night was 84.0, down from 111.8 the night before.
After four straight bullish trade ideas, I thought a little balance was needed, especially ahead of this morning’s employment report. I didn’t find anything I liked on the nightly scans, but there was a stock from my weekly scans that I liked. Cree, Inc. (Nasdaq: CREE) appeared on my weekly bearish scan and its fundamental ratings are really bad. The EPS rating is a 6 and the SMR rating was an E.
The weekly chart shows how the stock topped out a few weeks ago and has now turned lower. The weekly stochastic indicators made a bearish crossover last week and the last couple of times the indicators did that, the stock fell rather sharply over the ensuing weeks.
Buy to open the September 60-strike puts on CREE at $7.20 or better. These options expire on September 18. I suggest a target gain of 75% and that means the stock will need to fall to $47.40. The stock was down below the $30 level at its March low, so it won’t have to break to a new 52-week low to hit the target. I recommend a stop at $61.00.
— Rick Pendergraft
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