The indices returned to their winning ways on Tuesday as all four moved higher on the day. The Nasdaq led the way and the FANG stocks helped the cause after Netflix announced a price hike to its services.
The tech-laden index gained 1.71% on the day. The S&P was the second best performer with a gain of 1.07%. The Russell notched a gain of 0.86% while the Dow lagged slightly with a gain of 0.65%.
[hana-code-insert name=’adsense-article’ /]The sector performance showed eight out of 10 moving higher with healthcare leading the way with a gain of 1.77%.The other big gainers were an odd mix of sectors.
The communication services sector gained 1.64%, tech gained 1.51%, and utilities gained 1.31%.
Those were the top four sectors and the ones that gained over 1% on the day.
On the downside, the materials sector suffered the worst loss at 0.62% and it was joined in negative territory by the industrial sector with a loss of 0.31%.
My scans weren’t as negative last night as they were on Monday, but they remained very much skewed toward the bearish side. There were 94 names on the bearish side and only one on the bullish side.
Today’s trade idea is on a stock that we made a bearish bet on back on December 3. Realogy Holdings (NYSE: RLGY) appeared on the bearish list back then and it appeared on the bearish list again last night. The company scores a 50 on the EPS rating and a D on the SMR rating.
I went back to the chart that I drew in December and updated since then. The blue arrow marks the date of the bearish trade idea. We see that the upper rail has been extended out and the stock is hitting it currently. The stock is also in overbought territory based on the daily stochastic readings and made a bearish crossover just as it did in December.
Buy to open the March $20-strike puts on RLGY at $2.85 or better. These options expire on March 15. These options will double if the stock drops to $14.30. The low on January 2 was $14.25, so the stock won’t have to break to a new low for the options to double. I suggest a target gain of 100% and a stop at $18.50.
— Rick Pendergraft
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