Friday brought mixed results for stocks with an even split among the four main indices. The Dow moved up 0.08% to lead the way while the S&P gained 0.11 points—that’s points, not percentage points. The Russell was the worst performer with a drop of 0.51% and it was the only one of the four that lost ground for the week. The Nasdaq fell 0.17% on Friday.
Even though the indices were evenly split, the sectors were skewed to the down side. Seven of the 10 main sectors experienced losses on the day while the three defensive sectors gained ground.
[hana-code-insert name=’adsense-article’ /]The consumer staples sector led the way with a gain of 0.40%, the utilities sector gained 0.30%, and the healthcare sector inched up 0.03%.The energy sector was the worst performer with a drop of 0.42% and the materials sector declined 0.37% as the second worst performer.
My scans stretched their streak of negative results to 10 straight trading days.
Friday’s results showed 59 stocks and ETFs on the bearish side and 12 on the bullish side.
The barometer continued to hover just below the -50 mark with Friday’s final reading coming in at -52.8.
One of the most prominently represented sectors on the bearish list from Friday was the energy sector. Nearly a third of the names on the list were from the sector. One particular name that stood out was Hess (NYSE: HES). The company’s fundamental ratings are below average with an EPS rating of 19 and an SMR rating of a D.
What jumped out on the chart is what looks to be a head and shoulders pattern and that is a bearish set up. We see the left shoulder formed by the high in September and the left side of the neckline at the October low. The high in November marks the head and the low in early December looks like the right side of the neckline. Now the current high appears to be the right shoulder. For this pattern to be confirmed the stock will need to fall below the low in December.
Buy to open the February 67.50-strike puts on HES at $3.90 or better. These options expire on February 21. In order for these options to double the stock will need to reach $59.70. The low in December was $59.48. I suggest a target gain of 100% with a stop at $68.00.
— Rick Pendergraft
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