Wednesday produced mixed results for the indices again with three of the four moving higher. Three of the four opened lower with only the Dow opening higher. The index would go on to be the only one of the four to remain in positive territory throughout the day and it would lead the way with a gain of 0.61%.
The S&P moved up 0.13% and the Russell rallied 0.07%. The Nasdaq opened lower and remained in negative territory for the entirety of the day, losing 0.17% in the process.
Six of the 10 main sectors moved higher on Wednesday and the energy sector led the way with a gain of 1.22%. The industrial sector gained 0.78% and the consumer staples sector was right behind it with a gain of 0.76%.
The utilities sector dropped 0.19% and was the worst performing sector for a second straight day. The communication services sector dropped 0.18% as the second worst performer.
My scans turned more negative last night with 55 bearish signals and 17 bullish signals.
The barometer continued to fall as the scans continue to generate negative results. Last night’s reading was -30.9, down from -24 on Tuesday.
Even though there were a pretty high number of signals to choose from between the two lists, there weren’t very many where I liked the whole picture. In the end I felt like a bearish trade on the KraneShares CSI China Internet ETF (AMEX: KWEB) would give us the greatest odds of success. Because it’s an ETF we don’t have the usual fundamental ratings to consider, but the fund did recently receive a bearish signal from the Tickeron trend prediction tool. The signal shows an 89% probability of the fund dropping over the next month.
What we see on the chart is how the fund has been declining since February. The drop saw the ETF decline by 37.4%. The 50-day moving average seems to be acting as resistance at this point. One of the biggest things that stood out for me was how the fund dropped in the last two instances when the stochastic indicators were in overbought territory and then made a bearish crossover. The RSI was in the 60 area in each of those instances and it peaked there this week as well.
Buy to open the August 72-strike puts on KWEB at $4.75 or better. These options expire on August 20, 2021. I suggest a target gain of 75% and that means the stock will need to drop to $63.70. The target is below the lows from May and June, but it is only 8.7% from the current price. I suggest a stop at $72.00.
— Rick Pendergraft
See What One Ticker... One Trade... EVERY WEEK... Can Do for YOU [sponsor]New research proves that trading one ticker every week has had the ability to produce extraordinary gains... Including a rare 2,614% in under 11 days. See this groundbreaking new discovery for yourself. SHOW ME ONE TICKER PAYOUTS