Stocks were mixed on Tuesday with two indices moving higher and two moving lower. The Nasdaq led the way with a gain of 0.54% and that was the only significant move. The S&P joined the Nasdaq in positive territory, but the gain was only 0.12%. The Dow and Russell turned in identical 0.08% declines.
The sectors were skewed to the bullish side with seven moving higher and three moving lower. The communication services sector was the top performer with a gain of 0.66% while the tech sector finished with the second best performance at 0.35%.
[hana-code-insert name=’adsense-article’ /]Materials were the worst performing sector with a decline of 1.0%.The consumer staples sector fell 0.59% and the industrial sector was the third one in the red with a drop of 0.19%.
My scans continued to produce negative results with 60 names on the bearish list and six names on the bullish list.
This is the fifth straight night of negatively skewed results from the scans.
The barometer moved down slightly from -51.6 to -54.6.
Last night’s bullish list was rather odd in that of the six names on the list, five of them had EPS ratings below 40. That didn’t make it much of a decision on which side today’s trade idea would come from. Vodafone Group (Nasdaq: VOD) appeared on the bearish list and is the subject of today’s trade idea. The company gets mixed scores on the fundamental ratings with a 93 on the EPS rating and a D on the SMR rating.
We see on the chart that the stock has been trending lower within the confines of a trend channel for the last seven months and it just hit the upper rail of the channel. The upper rail connects the highs from December and April/May. The stochastic readings are in overbought territory and just made a bearish crossover last night.
Buy to open the August 18-strike puts on VOD at $1.55 or better. These options expire on August 16. In order for these options to double the stock will need to reach $14.90. The target is slightly below the recent low, but not below the lower rail. I suggest a target gain of 100% with a stop at $16.90.
— Rick Pendergraft
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