The indices finished with mixed results on Thursday as three of them finished with losses and one finished in the black. The Nasdaq led the way with a gain of 0.53%, but it also spent some time in negative territory.
On the down side, the Russell was the worst performer with a drop of 2.0% and it was followed by the Dow with a decline of 1.39%. The S&P managed to trim its loss to 0.56% by rallying in the second half of the day.
Eight of the 10 main sectors fell on Thursday with the energy sector getting hit the hardest with a loss of 4.94%. Two other sectors dropped over 2.0%, industrials (-2.17%) and financials (-2.11%).The tech sector was the top performer with a gain of 0.36% and it was joined in positive territory by the communication services sector with a move of 0.12%.
My scans were negatively skewed for a fifth straight night with 11 bullish signals and 64 bearish signals.
The barometer dropped to -43.1 from -32.2 once these results were added in to the calculation.
Even with a great number of stocks and ETFs to choose from last night, there were only a few trade setups that stood out to me. Ultimately the one that I liked best was on iShares Latin America 40 ETF (NYSE: ILF). The fund appeared on my bearish list and therefore we don’t have fundamental ratings to look at.
This trade idea is driven primarily by technical factors with the stock struggling to move back above the $23 level. The fund gapped lower on June 11 and has struggled to move back above that point in the last month. The interesting thing is that the $23 area was a high before the gap higher on June 5. I look for the fund to move back down to $20 level in the coming weeks.
Buy to open the August 24-strike puts on ILF at $2.20 or better. These options expire on August 21. I suggest a target gain of 75% for this trade and that means the fund will need to drop to $20.15. The fund has some potential support in the $20 area. I suggest a stop at $23.75.
— Rick Pendergraft
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