Stocks were all over the place on Thursday with decent gains at some points and sizable losses at other times. At the end of the day there were two indices that finished higher and two the finished lower. The Dow led the way with a gain of 0.39% while the S&P moved up 0.25%. The Russell was the worst performer with a decline of 0.27% and the Nasdaq joined it in negative territory with a loss of 0.09%.
The sectors were mixed on the day with a slight skew to the plus side. There were six sectors that moved higher and they were led by the consumer staples sector with a gain of 1.53%. The utilities sector gained 1.31% and it was the only other sector to gain over one percent.
[hana-code-insert name=’adsense-article’ /]The energy sector was the worst performer for a second straight day and this time it dropped 0.64%.The tech sector was the second worst performer, but the loss was only 0.17%.
My scans flipped back to a positive skew last night with 35 names on the bullish list and not a single stock or ETF on the bearish list.
After the big selloffs on Monday and Wednesday, there are very few stocks that are overbought and could possibly generate a bearish signal.
The barometer jumped from -22.3 to -1.2 once these results were added to the past numbers.
Needless to say, today’s trade idea is from the bullish list. Even though there were 35 names on the list there was only one stock that stood out to me for the combination of its fundamentals and its chart and that was PayPal Holdings (Nasdaq: PYPL). The fundamental ratings are as high as they can get with a 99 on the EPS rating and an A on the SMR rating.
There wasn’t really a pattern or anything that stood out on the daily chart except for the fact that the stock is oversold based on the daily stochastic readings. What jumped out at me was that the stock is in oversold territory based on the weekly stochastic readings and it is the first time since June 2016.
Buy to open the October 100-strike calls on PYPL at $8.80 or better. These options expire on October 18. In order for these options to double the stock will need to reach $117.60. The stock was above the $120 level for good part of July, so the stock won’t have to reach that high. I suggest a target gain of 100% with a stop at $102.00.
— Rick Pendergraft
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