This Trade Could Double Your Money in 6 Weeks

Tuesday saw three of the four indices close lower after all four opened higher. The Russell was the lone one to close with a gain and that gain was 0.32%. The ongoing trade disputes caused stocks to turn lower around midday.

The Nasdaq finished with the worst loss at 0.86%. The Dow lost 0.54% and the S&P closed down 0.49%.

The sectors were evenly split with five moving higher and five moving lower.

On the plus side, the energy sector led the way with a gain of 0.63% with the other four sectors that were in positive territory gaining between 0.2% and 0.35%.

Tech was by far the worst performing sector with a loss of 1.18% followed by the financial sector with a loss of 0.9%.

After three straight days of strong bullish skews, my scans were far more balanced on Tuesday evening.

There were 20 bullish signals and 17 bearish signals at the end of the day. This balanced reading caused the barometer to drop from 81.1 to 57.4.

With five of the last six trade ideas being bullish ones, I felt it was prudent to look for a bearish trade idea in order to keep things somewhat balanced. The stock that stood out to me was Devon Energy (NYSE: DVN). The fundamental picture for Devon is a little mixed with an EPS rating of a 10, but the SMR rating is a B. Earnings and sales have both declined over the last few years.

What stood out on the chart for Devon was how the stock struggled at the $45 level back in January. The stock moved above that level on Tuesday, but couldn’t maintain its strength. This created a long-tailed top and signals a possible correction in the coming weeks.

Buy to open the Aug18 46-strike puts on DVN at $3.60 or better. These options expire on August 17. In order for these options to double, the stock will need to drop to $38.80, and that is near the low back on June 5. I would suggest a target of 100% for the gain with a stop loss on a close above the $45.20 level.

— Rick Pendergraft

Join the $39 Trading Revolution – Plus 1 Month FREE! [sponsor]
Short-term profits are now easy to grab. We DOUBLED our money in ONE day... and we're NOT day traders. It's a trading revolution, and it's long overdue. Click here to grab your share of the profits… Plus, Get 1 Month of Free Trades!

Rick Pendergraft, Trades Of The Day

Rick Pendergraft has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick's analysis process includes fundamental, sentiment and technical analysis.