Stocks fell for a third straight day on Thursday with all four indices losing ground again. They started in negative territory and stayed there for the rest of the day. The Russell experienced the worst loss at 0.48% and it was followed by the Nasdaq with a loss of 0.24%. The Dow dropped 0.20% and the S&P experienced the smallest drop at 0.16%.
Seven of the 10 main sectors lost ground on the day with the consumer discretionary sector suffering the biggest loss at 0.57%. The consumer staples sector and the tech sector tied for the second worst performance at -0.50%.
[hana-code-insert name=’adsense-article’ /]The energy sector led the way again with a gain of 1.64%.The communication services sector gained 0.27% for second place and healthcare gained 0.26% as the third sector in the black on the day.
My scans produced a fourth straight negative result with 41 names on the bearish list and 13 on the bullish list.
The barometer dropped slightly after the results were added in, falling to -30.4 from -25.8.
Last night’s scan results were once again a tough situation to choose from.
Once again we saw better fundamentals from the stocks on the bearish list than the fundamentals for the stocks on the bullish list.
Regardless, I isolated a bullish trade on Tri Pointe Homes (NYSE: TPH) that I like. The company’s fundamental ratings show an EPS rating of 54 with an SMR rating of a C. Both of those ratings are average, but the chart makes up for that.
We see on the chart that the stock has been trending higher since late June and a trend channel has formed since late July. The stock just hit the lower rail of the channel as it also found support at its 50-day moving average. The stock was in oversold territory a few weeks back, turned higher, and then pulled back again in the last few days.
Buy to open the January 15-strike calls on TPH at $0.95 or better. These options expire on January 17. In order for these options to double the stock will need to reach $16.90. The stock will need to reach a new 52-week high to hit our target, but the trend has been strong enough that I think it can get there. I suggest a target gain of 100% with a stop at $15.00.
— Rick Pendergraft
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