Stocks moved higher again on Thursday before the pre-holiday closure on Friday. All four indices moved higher on the day and for the Nasdaq and S&P it was a clean sweep with both moving higher all four trading days.

The Nasdaq led the way on Thursday with a gain of 0.52% and it was followed by the S&P which gained 0.45%. The Dow moved up 0.36% and the Russell tacked on 0.32%.

Nine of the 10 main sectors moved higher on Thursday with the communication services sector being the lone one in the red with a loss of 0.33%.

The smallest gain belonged to the financial sector at 0.13%.

The materials sector led the way with a gain of 1.88% and the energy sector jumped 1.11% as the second leading performer.

My scans turned negative on Thursday with 26 bearish signals and eight bullish signals.

That ended a streak of five straight positive days.

The barometer dropped sharply once these results were added in to the equation, falling from 84.0 to 43.0.

After a series of bullish trade ideas and now with the scans shifting to a more bearish outlook, today’s trade idea is a bearish one. Rite Aid (NYSE: RAD) appeared on the bearish list and its fundamentals ratings are poor with an EPS rating of 31 and an SMR rating of a D.

There were a couple of things that stood out on the chart for Rite Aid. First, the stock stalled in the $18.50 area back in March and now the stock has hit $18.25 and stalled these last few days. The second thing that stood out was the stochastic indicators made a bearish crossover on Thursday and the last three or four times that has happened, it has been a sign of a downward move.

Buy to open the August 20-strike puts on RAD at $3.90 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 $12.20. The stock found support in that area back in mid-June. I recommend a stop at $19.25.

— Rick Pendergraft

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