This Trade Could Double Your Money in About 6 Weeks

Stocks came under pressure again on Tuesday and all four indices closed in the red. All four indices were higher in early trading, but they all rolled over around midday and the losses grew toward the end of the day.

There was a small boost in the final half hour as it marked the end of the first quarter. For the record, the first quarter was the worst one for the Dow since 1987 and for the S&P it was the worst quarter since 2008.

The Dow was the worst performer with a loss of 1.84% and it was followed by the S&P with a decline of 1.6%.

The Nasdaq was down over 1.0% heading in the final half hour, but rallied and narrowed the loss to 0.95%.

The Russell also rallied in the last half hour of trading and still closed with a decline of 0.45%.

Only one of the 10 main sectors managed to log a gain on Tuesday and that was the energy sector with a move of 1.54%.

The communication services sector nearly made it two sectors with gains, but ultimately settled with a loss of 0.18%.

The utilities sector took the worst loss at -4.04% and it was the only sector to lose more than 3%. The second worst performance came from the financial sector and that was a loss of 2.76%.

My scans turned decidedly more pessimistic on the day with 40 bearish signals and not a single bullish signal.

The barometer dropped to -14.2 on Tuesday and that snapped a stretch of 23 straight days with a positive reading.

As you could probably guess, today’s trade idea is a bearish one given that there weren’t any bullish signals from my scans. Slack Technologies (NYSE: WORK) was one of the stocks on the bearish list and its fundamental ratings are pretty bad. The EPS rating is a 2 and its SMR rating is a D.

We see on the chart that the stock has struggled to move above the $30 level since it dropped below that level back in September. The stock attempted to move above in February and two more times in March, but was unsuccessful each time—at least in terms of closing above that price.

Buy to open the May 28-strike puts on WORK at $3.60 or better. These options expire on May 15. For these options to double, the stock will need to drop to $20.80. There is potential support at $20, so it won’t have to break that support. I suggest a target gain of 100% with a stop at $30.00.

— Rick Pendergraft

This is the #1 Stock to Buy for the AI Tidal Wave [sponsor]
Marc Chaikin warned people about NVDA before its 2023 bull run - now he's naming his next pick or the AI tidal wave. Learn more here.

Rick Pendergraft, Trades Of The Day

Rick Pendergraft has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick's analysis process includes fundamental, sentiment and technical analysis.