The indices came under a little selling pressure on Thursday after initial jobless claims were a little worst than expected. All four indices opened lower and all four remained in the red for the entire day.
The Nasdaq and Russell were in close contention for the title of worst performer. The Nasdaq ended up garnering the title with a loss of 0.73%. The Russell dropped 0.72%.
The Dow fell 0.50% and the more diverse S&P 500 finished with a loss of 0.34%.
I found the sector performances to be a little odd as five moved higher, one was unchanged, and four moved lower. I didn’t expect that with the losses across the board for the indices.
The tech sector took the biggest hit with a decline of 1.24% and it was the only one to lose more than 1.0%. The energy sector fell 0.45% as the second worst performer.Utilities led the way with a gain of 1.27%, but it was the only sector that gained more than 1.0%. The materials sector inched up 0.33% and that was good enough for the second best move.
My scans came out dead even last night 10 bullish signals and 10 bearish signals. In the 11 years I have been running these scans, there have only been a handful of times they have come out even.
The barometer fell slightly with the neutral reading from the scans. The final reading was 3.0, down from 7.8 on Wednesday night.
Being that we have had two bullish trade ideas in a row and that I believe we need a good balance right now, I was more focused on bearish trade ideas last night. There were a couple of stocks on each side that I liked, but I decided on a bearish trade idea on Iron Mountain (NYSE: IRM). The company’s fundamentals are actually pretty good with an EPS rating of 83 and an SMR rating of a B, but it was the chart that convinced me to suggest the trade.
What the chart shows is how the stock has experienced resistance at the $27.75 area in the past. It peaked at that level back in April and the area served as support back in late February. The area seems to be a key level for the stock, even though it moved above the price in June. We see that the daily stochastic indicators made a bearish crossover last night and that has been a pretty good sign that the stock was heading lower in recent months.
Buy to open the September 30-strike puts on IRM at $3.80 or better. These options expire on September 18. I suggest a target gain of 75% and that means the stock will need to reach $23.35. That target means the stock will need to move below the $24 level which acted as support in late June. I recommend a stop at $28.25.
— Rick Pendergraft
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