Stocks continued to get pounded on Tuesday and the domestic indices have now each shed over 7% in the last three trading days. As for Tuesday results, the Russell took the biggest loss at 3.45% and it was followed by the Dow which dropped 3.15%.
The S&P fell 3.03% and the Nasdaq suffered the smallest loss at 2.77%. The Dow dropped below its 200-day moving average yesterday and the Russell is sitting just above its 200-day.
All 10 of the main sectors fell once again and once again it was the energy sector that took the biggest loss at 4.42%.The materials sector was the second worst performer with a loss of 4.31% and the industrial sector fell 4.08% to give us three sectors with losses greater than 4%.
The consumer staples sector dropped 1.8% for the smallest loss and the utilities sector declined 2.1% as the second smallest loss.
Because of the massive selling in the last few days, my scans didn’t produce many signals on either side last night. There were three stocks on the bullish signal and six on the bearish side.
The barometer continued to climb from the -55.8 reading the indicator had on February 19. The final reading on Tuesday was -16.7.
Even though there were only nine stocks to choose from in the results from my scans, there was one in particular that stood out. Alkermes (Nasdaq: ALKS) appeared on the bearish list and the pharmaceutical company only scores a 36 on the EPS rating system. The company gets a C on the SMR grading scale.
We see on the chart how the stock has been trending lower and there is a now a trend line that connects the highs from September and December. The stock hit the trend line last week and has now fallen. The daily stochastic indicators are in overbought territory and made a bearish crossover last night.
Buy to open the April 21-strike puts on ALKS at $2.15 or better. These options expire on April 17. In order for these options to double the stock will need to reach $16.70. The low a few weeks ago was $16.65, so the stock won’t need to break to a new low in order for the stock to hit our target. I suggest a target gain of 100% with a stop at $20.75.
— Rick Pendergraft
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