Stocks opened near breakeven or in positive territory in the early session on Friday, but then the bears took control again in the afternoon session. By the end of the day all four indices lost ground and for the S&P it marked a third straight losing week. The last three-week losing streak for the index was last September.
The S&P took the biggest hit on Friday with a loss of 1.12% and the Nasdaq fell 1.07%. Those were the two that lost more than 1.0%. The Russell only lost 0.38% while the Dow dropped 0.88%.
All 10 main sectors fell on Friday and six of them lost more than 1.0%.The worst loss was 1.76% and that was the utilities sector.
Two sectors fell 1.72% for the second worst performance and those were the materials sector and the tech sector.
The healthcare sector fell 0.15% and that was the smallest loss of the bunch.
The financial sector dropped 0.20% as the second best performer.
My scans turned in a second straight negative result with 58 bearish signals and 10 bullish signals.
The negative results were enough to drop the barometer in to negative territory with a reading of -24.9. It was the first negative reading in seven trading days. The reading on Thursday was 5.6.
Despite the abundance of signals to choose from on each side, I had a hard time finding a trade setup that I liked. In the end I decided to go with a bullish signal from a weekly scan and it is a bullish trade idea. Jack Henry & Associates (Nasdaq: JKHY) appeared on my weekly bullish scan and the company has an EPS rating of 84 and the SMR grade is an A.
The weekly chart is what got my attention as the stock hit the lower rail of a trend channel and bounced in the past week. The weekly stochastic indicators are in oversold territory and they made a bullish crossover this past week. The last time we saw that was in May ’19 and the stock rallied nicely from there.
Buy to open the December 160-strike calls on JKHY at $12.60 or better. These options expire on December 18. I suggest a target gain of 75% for these options and that means the stock needs to reach $182.05. The stock was trading over $200 before the recent selloff. I suggest a stop at $153.00.
— Rick Pendergraft
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