Thursday was a bit of an odd day for the indices. All four opened higher, but three of the four dipped shortly after the open. The Nasdaq didn’t dip and showed solid gains all day. The Dow was the only one that ever dropped in to the red throughout the day, but it rallied late to finish with a small gain.
As for the final results, the Russell led the way with a gain of 1.56% and the Nasdaq was right behind it with a gain of 1.42%. The S&P moved up a more modest 0.53% and the Dow inched up 0.13%.
The sectors were split for a change with six moving higher and four moving lower. The communication services sector was the top performer with a gain of 1.43% and the consumer discretionary sector moved up 1.31% as the second best performer. In all there were four sectors that gained over 1.0%.
Oil fell sharply again and that caused the energy sector to lose 3.07%. That was by far the worst performance on the day. The materials sector fell 1.41% as the second worst performer.My scans turned more bearish last night with 29 bearish signals and zero bullish signals.
The barometer dropped back in to negative territory after seven straight positive readings. The final reading for Thursday was -4.1, down from 35.4.
Obviously today’s trade idea is a third straight bearish one since there weren’t any bullish signals last night. The one signal that stood out the most was Cloudfare (NYSE: NET). The company’s fundamental indicators are mixed with an average EPS rating of 58, but the SMR rating is below average with a D rating.
The stock has struggled in the $42.50 on two previous occasions this year and both times it reached that level the stock was overbought. We see in early July the ROS was in overbought territory and so were the stochastic indicators. The same thing happened in early August—both the RSI and the stochastics were in overbought territory. In both instances the stock dropped down to the $35 level within the next month or so.
Buy to open the November 45-strike puts on NET at $6.10 or better. These options expire on November 20. I suggest a target gain of 75% and that means the stock will need to drop to $34.30. The stock was down near the $32.50 level in early September, so it won’t have to break below that low to hit our target. I suggest a stop at the $44.25 level.
— Rick Pendergraft
Collect up to 5 dividend checks per week [sponsor]Hi, I'm Tim Plaehn, and I just did the math in my own, real-money portfolio. I'll be collecting 70 dividend checks this quarter. That's nearly 5 per week on average. Automatically… no trading, no options, no work. You don't need a lot of money. You can be retired or near retirement... Either way, I'll show you my #1 plan to quickly collect dividends like clockwork from high-quality, cash-flowing business. Click here to learn how to collect up to 5 dividends a week.