The indices were all lower on Thursday, but the losses vacillated throughout the day. For the first half hour or so the losses were relatively small, but then stocks fell as Director of National Intelligence Joseph Maguire testified before Congress. The indices would trim the losses in the afternoon and the Dow and S&P actually moved in to the black briefly. All four would finish in the red after a late dip.
The Russell suffered the worst loss at 0.98% and it was followed by the Nasdaq which fell 0.58%. The Dow dropped 0.30% and the S&P took the smallest loss at 0.24%.
[hana-code-insert name=’adsense-article’ /]Six of the 10 sectors fell on the day while four moved higher.The energy sector was the worst performer with a decline of 1.29%.
The communication services sector fell 0.99% and was the second worst performer.
The defensive sectors led the way with consumer staples gaining 0.53% and utilities moving up 0.50%.
Industrials and tech eked out small gains as the other two in the black.
My scans were positive for a second straight night with 22 names on the bullish list and 13 on the bearish side.
The barometer moved in to positive territory with a reading of 0.7 and that is the first positive reading from the indicator since September 3.
I have another bullish trade idea for you today and it is on Masco Corp. (NYSE: MAS). The company scores a 92 on the EPS rating, but it doesn’t have an SMR from Investor’s Business Daily. The issue is in the calculation of the ROE. IBD doesn’t show one, but the sales growth is decent and the profit margin is a respectable 13.1%.
The daily chart shows a trend channel has formed over the last four months. The lower rail is just below the 50-day moving average and the 50-day seems to be acting as support at this time. We also see that the daily stochastic readings reached oversold territory and made a bullish crossover last night. Each of the last three times the stochastic readings have made a bullish crossover, the stock has rallied at least 14%.
Buy to open the November 40-strike calls on MAS at $2.85 or better. These options expire on November 15. In order for these options to double the stock will need to reach $45.70. If the pattern for the stochastic readings holds true, the stock should be able to reach that target price. I suggest a target gain of 100% with a stop at $39.90.
— Rick Pendergraft
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