Investors and traders didn’t like what Fed Chairman Powell had to say on Tuesday and that sent stocks tumbling. Powell expressed that the Fed is “insulated” from political pressures and that the FOMC would act accordingly. The indices were already down when the comments were made, but they fell further afterwards.
The Nasdaq took the biggest hit with a drop of 1.51% and it was followed by the S&P with a drop of 0.95%. The Dow fell 0.67% and the Russell actually held up the best with a loss of 0.59%
The consumer staples sector had the second best performance, but that was a loss of 0.05%.
It was a close race for the worst performance on Tuesday, but there were two sectors that dropped far more than the others.
The communication services sector fell 1.86% and the tech sector dropped 1.84%.
Those were the only two sectors that suffered losses greater than one percent.
My scans turned in another decidedly bearish result last night with 97 names on the bearish list and only two names on the bullish side of the ledger.
The barometer dropped from -79.4 to -94 once these results were added in to the equation.
There were a number of charts that stood out to me last night, but one stock really stood out for its chart and fundamentals. Schlumberger (NYSE: SLB) appeared on the bearish list and its fundamentals are pretty bad. The EPS rating is an 18 and the SMR rating is a D.
The chart shows how the stock fell from April through late May, dropping from above $48 to below $34. From the end of May through this week the stock has rallied back up, but now it is facing resistance from its 50-day moving average and it is overbought. The stochastic readings made a bearish crossover last night.
Buy to open the August 40-strike puts on SLB at $2.70 or better. These options expire on August 16. In order for these options to double the stock will have to drop to $34.60. The stock hit a low just below $34 back in May so it won’t have to break to a new low to hit our target. I suggest a target gain of 100% with a stop at $39.25.
— Rick Pendergraft