The bullish streak came to a halt on Friday as all four of the main indices saw significant drops on the day. The Russell fell 4.09% and the Dow dropped 4.06% as the two worst performers. The Nasdaq lost 3.79% and the S&P declined 3.37% as the best performer on the day.
For the week, the Dow gained 12.84% and that was the best weekly gain in 82 years. The Nasdaq was the only one of the main four that didn’t see double-digit percentage gains on the week.
The utilities sector gained 0.54% on Friday and it was the only sector that managed to post a gain on the day.The energy sector took the biggest hit on Friday with a loss of 6.78%.
The tech sector dropped 4.52% and that was the second worst performance.
My scans slowed dramatically on Friday with only two bullish signals and three bearish signals.
This halted a string of 13 straight days with positive results.
The barometer dropped from 74.1 to 43.2 once these results were added in to the equation.
Even though there were only five stocks with signals, there was one on the bearish list that I liked. The company is PagerDuty (NYSE: PD) and it scores a 20 on the EPS rating system and a D on the SMR rating scale. The software company operates an On-Call Management platform.
We see on the chart how the stock has been trending lower. It dropped all the way down to $12.33 on March 17 before it rallied back up above $19.50. Now the stock looks like it is ready to roll over again. The stochastic readings jumped back up near the 80 level, but made a bearish crossover on Friday.
Buy to open the May 17.50-strike puts on PD at $3.40 or better. These options expire on May 15. With the volatile market and the high option premiums, I suggest a target gain of 50%. The spread on these options is pretty wide, so I suggest trying to get in below the asking price. I suggest a stop at $19.25.
— Rick Pendergraft
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