Sticking with the pattern for this week, the indices took huge losses on Thursday. So far this week we have seen big gains on Monday followed by big losses on Tuesday. There were big gains on Wednesday followed by big losses on Thursday. Will the pattern hold for today?
The Dow took the biggest loss on Thursday with a decline of 3.58% and it was followed by the Russell with a drop of 3.42%. The S&P fell 3.39% and the Nasdaq took a 3.1% hit.
All 10 main sectors fell on the day with the industrial sector taking a 4.89% hit as the worst performer of the day.The financial sector was close behind with a loss of 4.82%.
These were the only two sectors that fell over 4%, but there were five others that fell over 3%.
The only two sectors that didn’t fall more than 2% were the defensive sectors.
The utilities sector was the top performer with a loss of 1.48% and the consumer staples sector dropped 1.88% which was good enough for second place honors on Thursday.
My scans have really slowed in the last few days and last night there were three stocks on the bullish list and three on the bearish list.
The barometer really dropped last night because the huge reading from last Friday dropped out of the calculation. The final reading last night was -25.7, down from 87.4 on Wednesday night.
After six straight bullish trade ideas, I have a bearish one for you today. Pinduoduo (Nasdaq: PDD) appeared on the bearish list last night and the company’s fundamental ratings are poor. The EPS rating is only a 14 and the SMR rating is a D. The company is scheduled to report earnings on March 11, so you will want to be aware of that announcement.
We see on the daily chart that the stock has been trending lower since early November with a trend line connecting the highs over the last four months. The stock is just below that trend line currently, but seems to be hitting resistance at its 50-day moving average. We also see that the daily stochastic indicators made a bearish crossover last night.
Buy to open the April 38-strike puts on PDD at $4.30 or better. These options expire on April 17. In order for these options to double the stock will need to drop to $29.40. This is below the low in November, but not a 52-week low. I suggest a target gain of 100% with a stop at $38.25.
— Rick Pendergraft
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