Thursday’s action looked like there was some profit taking going on as all four indices were higher throughout most of the day, but some late afternoon selling caused all four to finish in the red. The Russell was somewhat of an exception as it spent the better part of the day in negative territory and it finished with the worst loss at 2.48%.
The Dow finished with a decline of 0.58% and the Nasdaq dropped 0.46%. The S&P took the smallest hit at 0.21%.
Six of the 10 main sectors lost ground on the day with the energy sector taking the worst loss at 2.8%.The financial sector fell 1.58% and the consumer discretionary sector dropped 1.21%.
These were the only three sectors that lost more than 1.0%.
The utilities sector was the top performer on Thursday with a gain of 3.01%.
The healthcare sector took second place honors with a move of 1.3%.
My scans turned more pessimistic last night with 83 bearish signals and 15 bullish signals.
The barometer turned lower once again, but not by much. The final reading was -57.6, down from -51.1.
There were a number of stocks and funds on the bearish list that got my attention, but it was the setup on Trip Advisor (Nasdaq: TRIP) that I liked best. The company scores a 39 on the EPS rating system and a C on the SMR grading scale.
The daily chart shows how the stock has been declining since last May, but in reality the trend lower goes all the way back to October ’18. The trend line that connects the highs over the past 13 months is coming in to play again and the stock hit it on Wednesday and then turned sharply lower yesterday. We see that both the RSI and the stochastic readings were in overbought territory and have now started to turn lower.
Buy to open the July 23-strike puts on TRIP at $3.20 or better. These options expire on July 17. I suggest a target gain of 100% for this trade and that means the stock will need to reach $16.60. The stock was below $15 just a few weeks ago, so we won’t need to break that potential support. I suggest a stop at $23.00.
— Rick Pendergraft
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