I have been in the investment publishing industry since 2000. I have been studying and analyzing the market for even longer than that. But the current market environment is unlike anything I have ever seen.
In the bear market of 2000, it took the S&P almost a year before it fell over 20% from the high that would mark a bear market territory. In 2007-2009, it took just over five months for the S&P to drop over 20%.
The S&P is down 26.9% in the last four weeks.Global Telecom & Technology (NYSE: GTT), the subject of yesterday’s bearish trade idea, fell 26% in one day.
The losses for the indices on Thursday were the worst we have seen since Black Monday, October 19, 1987.
That was the day the Dow dropped 22.6%.
As for Thursday, the Russell fell 11.18%, the Dow lost 9.99%, the S&P fell 9.51%, and the Nasdaq dropped 9.43%.
All 10 sectors saw incredible losses as well and five sectors saw double-digit percentage losses.
The energy sector fell 12.47% and that was the biggest loss of the bunch. The financial sector dropped 10.81%.
Believe it or not, the best performance was a loss of 7.47% and that was the healthcare sector.
Because everything is oversold, my scans continue to produce more bullish signals than bearish signals. On Thursday night there were 74 names on the bullish list and not a single stock or ETF on the bearish list.
The barometer jumped to 72.6 from 61.8 after adding these numbers in.
Once again it was impossible to find a chart and overall setup from my scans that I liked and turned to other resources for today’s trade idea. This time the company is PTC Therapeutics (Nasdaq: PTCT) and the idea is a bearish one. The company scores a 15 on the EPS rating system and a D on the SMR grading scale.
Like we saw with Global Telecom yesterday, PTC Therapeutics just saw its 10-day moving average cross bearishly below its 50-day moving average. Most companies saw this happen days or even weeks ago. For PTCT, the last time this happened was last May and the stock continued to plunge after the crossover. I am looking for the stock to follow a similar path.
Buy to open the May 45-strike puts on PTCT at $8.00 or better. These options expire on May 15. In order for these options to double the stock will need to drop to $29. The spreads on options right now are crazy with the bid on this option at $5.70 and the asking price is at $8.00. If you can work this trade to get in at a better price it would be to your benefit. With support at the $32 level, I suggest a target gain of 50% on this trade. I also suggest a stop at $45.50.
— Rick Pendergraft
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