Thursday saw some selling hit the indices after the weekly initial jobless claims jumped unexpectedly and for the first time since March. It also hurt the indices that Apple got hit hard after a Consumer Protection Probe was announced. The stock dropped 4.5%, its worst drop in 11 weeks.
The Russell managed to eke out a gain of 0.06 points—not percentage points, but actual points. The Nasdaq took the worst hit with a decline of 2.29%. The Dow fell 1.31% and the S&P rounded the losses with a drop of 1.23%.
Seven of the 10 sectors fell on Thursday with the tech sector dropping 2.6% as the worst performer.The communication services sector fell 1.62% and the consumer discretionary sector dropped 1.50%. Those were the only three sectors that dropped more than 1.0%.
The consumer staples sector led the way with a gain of 0.35%. The utilities sector inched up 0.12% and the financial sector gained 0.08%.
My scans turned more negative last night with 95 bearish signals and eight bullish signals.
The barometer dipped back down to -65.5 after Thursday’s results were added in to calculation.
There weren’t any setups on the bullish side that I liked, but there were several on the bearish side that I felt like offered us good opportunities. The one I liked best was on Juniper Networks (NYSE: JNPR). The stock appeared on the bearish list and the fundamental ratings are just average with an EPS rating of 46 and a C on the SMR grading scale.
The chart could be showing a head and shoulders pattern in the making with the shoulders up at the $25 area and the head being the high in June. The neckline is formed from the lows in May and late June. Even if the pattern doesn’t play out, the RSI and stochastic indicators are in overbought territory and the last few times we have seen both in overbought territory the stock has dropped afterwards.
Buy to open the September 26-strike puts on JNPR at $2.46 or better. These options expire on September 18. I suggest a target gain of 75% and that means the stock will need to drop to $21.70. That is just below the low in June and above the low in May. I recommend a stop at $25.25.
— Rick Pendergraft
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