Stocks flat out got crushed yesterday, at least most of them. All four of the main indices saw huge drops and they closed at the lows of the day. It does seem like there is a flight to quality at this point and I say that based on the trade ideas I’ve suggested in the last few weeks. I will explain that more in a minute.
As for the index returns, the Russell was the worst performer for a third straight day and this time it was a loss of 7.58%.The Dow fell 6.9% and the S&P dropped 5.89%.
The Nasdaq took the smallest loss again, but that was of little consequence given that it fell 5.27%.
Over the last 16 trading days I have suggested 11 bearish trade ideas and five bullish ones.
The trade ideas are based in part on my proprietary scans, another is from the fundamental ratings, and they are partly based on my review of the chart. The table below shows how these stocks performed yesterday. The average return for the stocks where bearish trades were suggested was -8.9%. The average return for the stocks with bullish trade ideas was -1.54%.
I wanted to share this with readers to show you how I break down the trade ideas and why I think they hold up.
Now back to yesterday’s performances. All 10 sectors dropped on Thursday and all of them dropped at least 3.0%. The smallest losses were on consumer staples and utilities at 3.79% and 3.92%, respectively.
The energy sector was the worst performer for a third straight day and it dropped 9.24% on the day. The financial sector was hit hard again and dropped 8.18%.
My scans continued to shift away from the extreme bearish readings, but all of the signals were on the bearish side last night. There were 32 bearish signals and there wasn’t a single bullish signal.
Because the readings haven’t been as bearish in the last few nights, the barometer continued to climb. The final reading last night was -49.9, up from -78.9 the night before.
With nothing but bearish signals coming from the scans, obviously today’s trade idea is a bearish one. The stock that stood out the most to me was Snap, Inc. (NYSE: SNAP). The company scores a 59 on its EPS rating and it gets a D on the SMR grading system.
It was the daily scans that brought Snap to my attention, but it was the weekly chart that jumped out at me. The stock hit resistance in the $21.25-$21.50 range back in February 2018 and it hit that area again this week before turning lower. We see that the weekly oscillators are in overbought territory and so are the daily indicators. Both are turning lower and the daily stochastic readings made a bearish crossover last night.
Buy to open the August 22-strike puts on SNAP at $3.65 or better. These options expire on August 21. I suggest a target gain of 100% and that means the stock will need to drop to $14.70. The stock could find support in the $14 area as that seems to be a pivot point. The stock danced around that area last fall. I suggest a stop at $21.50.
— Rick Pendergraft
Seriously Consider Buying This Stock Today [Video Analysis] There are certain inevitabilities in this world. And companies that cater to the inevitable have clear, long-term, secular growth patterns. The company I tell you about today is one of those… and with a 3% yield, almost 30 consecutive years of dividend raises, double-digit dividend growth, a very secure dividend, and the potential that shares are 28% undervalued, dividend growth investors should seriously consider buying this stock right now. In today’s video, I’ll give you this dividend growth stock’s name and ticker symbol, and I’ll show you why now could be a good time for dividend growth investors to pick up shares. Click here to watch it.