Stocks were mixed on Wednesday and there wasn’t much movement for the indices as a result. Three of the four indices moved lower while the Russell moved up 0.12%. The Nasdaq fell 0.30% as the worst performer and the S&P dropped 0.20% as second worst. The Dow lost 0.08% on the day.
The sectors were evenly split on the day with five moving higher and five moving lower. Consumer discretionary stocks led the way with a gain of 0.41%. The utilities sector and the materials sector finished the second and third best gains at 0.22% and 0.21%, respectively.
[hana-code-insert name=’adsense-article’ /]As for those that moved lower, the energy sector was the worst performer by far with a loss of 1.39%.The tech sector fell 0.69% as the second worst performing sector.
My scans turned in a second straight negative result on Wednesday with 30 names on the bearish list and seven on the bullish list.
The barometer moved back in to negative territory after these results were added in with a reading of -1.
That was down from a reading of 19.3 on Tuesday.
Today’s trade idea is another bearish one and the subject company is Twilio (NYSE: TWLO). The stock appeared on the bearish list and the company’s fundamental ratings aren’t that great. The EPS rating is 44 and the SMR rating is a C.
We see on the daily chart that Twilio has been trending lower since the end of July and a trend channel has formed that defines the different cycles. The stock just hit the upper rail of the channel on Tuesday and dropped sharply on Wednesday. The daily stochastic readings had reached overbought territory and made a bearish crossover yesterday.
Buy to open the November Week 5 110-strike puts on TWLO at $8.20 or better. These options expire on November 29. In order for these options to double the stock will need to drop to $93.60. The stock will have to break below the recent low to get to this level, but the slope of the channel is so steep that the lower rail will be well below our target in a few weeks. I suggest a target gain of 100% with a stop at $113.00.
— Rick Pendergraft
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