This Trade Targets a 100% Return by August

All three of the main indices moved lower yesterday, but the losses were pared considerably from the lows of the day. After President Trump announced that the summit with North Korea had been called off, investors showed concern and the selling hit the market. The Nasdaq only lost 0.02% while the S&P lost 0.2% and the Dow lost 0.3%. At the low of the day, the Dow was down more than 200 points.

The sectors were mixed yesterday, but with a bearish skew. Seven of the main sectors moved lower while three moved higher.

[hana-code-insert name=’adsense-article’ /]The utilities sector led the way with a gain of 0.82%.

The energy sector lost 1.68% and that made it the worst performer on the day.

The financial sector lost 0.78% as the second worst performer.

My scans remained bearishly skewed for a 13th straight night.

The tallies from last night showed 41 names on the bearish list and 10 on the bullish list.

The barometer slipped down to -28.7 from -25.7.

With the barometer remaining negative and more bearish signals to choose from, I have a bearish trade idea on NCR Corp. (NYSE: NCR) for today’s option trade idea. NCR is below average on its EPS rating (45) and average on its SMR rating with a C.

The stock has formed a bearish trend channel over the past four months and just recently hit the upper rail of the channel before turning lower. The upper rail of the channel coincides with the 50-day moving average and that could act as a secondary source of resistance.

Buy to open the Jul18 $31-strike puts on NCR at $2.40 or better. These options expire on July 20. For these options to double, the stock will need to get down to $26.20. The recent low was $26, so the stock won’t have to break to a new low in order to get there. I would suggest a target of 100% for this trade idea with a stop-loss point of $31.

— Rick Pendergraft

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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.