The performance change we saw on Tuesday carried over to Wednesday and we saw similar results. Three of the four indices lost ground and the Nasdaq gained ground, 0.67% to be precise.
The Russell dropped the most once again and this time the decline was even bigger at 2.63%. The Dow fell 1.04% and the S&P dropped 0.53%.
The sector results were the same as well with nine losing ground and only the tech sector gained ground.Tech stocks were up 1.67% on Wednesday.
The energy sector was the worst performer again with a drop of 4.92%.
The financial sector fell 3.74% as the Fed left rates alone and stated that they saw rates remaining low in to 2022.
The industrial sector declined 2.39% and that was the third worst performance.
My scans finally turned less bearish after four straight nights of triple-digit bearish signals. There were seven bullish signals and 25 bearish ones on Wednesday.
The barometer jumped pretty sharply once these results were included, moving from a reading of -122.0 to -78.9.
With 32 names to choose from between the two lists, you would think there would be several trade setups that got my attention. But that wasn’t the case at all. There was only one that caught my eye and that was HP Inc. (NYSE: HPQ). The stock appeared on the bearish list and the fundamental ratings are split. The EPS rating is above average at 70. The company doesn’t have an SMR rating due to not having a calculable ROE. The other parts of the SMR are pretty low though. The profit margin is below average at 4.9% and sales growth has been slow.
We see on the chart that the stock’s initial rally off the March low stalled at $18. The stock hit that level again earlier this week and has moved lower for two straight days now after hitting $18 on Monday. The daily stochastic readings are in overbought territory and made a bearish crossover last night.
Buy to open the August 19-strike puts on HPQ at $3.00 or better. These options expire on August 21. I suggest a target gain of 75% and that means the stock will need to drop to $13.75. The stock dropped to $13.26 on May 14 so it won’t have to break that low in order to hit our target. I recommend a stop at $18.25.
— Rick Pendergraft
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