The indices were mixed on Thursday with the Nasdaq moving higher and the other three moving lower. None of the moves were all that big. The gain on the Nasdaq was only 0.27%.
The biggest decline was by the Dow and that was only 0.29%. The Russell fell 0.22% and the S&P lost 0.20%.
Eight of the 10 sectors moved lower on the day. Communication services led the way with a gain of 0.50% and the tech sector joined it in positive territory with a move of 0.04%.The energy sector dropped 1.94% and that was the biggest loss on the day. The financial sector fell 0.63% and that was the second worst performance.
My scans were negative again last night, but they continued toward a less bearish reading.
There were 44 bearish signals and 21 bullish signals for Thursday.
The barometer rose to -39.5 from -51.0 as a result of these figures.
There were equal numbers of trade ideas on the bullish and bearish sides last night. After looking at each one for the fundamentals, the chart, and the option pricing, I decided on a bearish trade on Raytheon Technologies (NYSE: RTX). The company has mixed fundamental ratings with an EPS rating of 47 and an SMR grade of a B.
The chart shows how the stock has been declining since mid-February with a trend line connecting the highs. The biggest thing that stood out was how consistently the stock has declined after the stochastic indicators reached overbought territory and then made a bearish crossover. I expect a decline in the 15-20% range over the coming weeks.
Buy to open the November 65-strike puts on RTX at $6.60 or better. These options expire on November 20. I suggest a target gain of 75% and that means the stock will need to drop to $53.45. That is a drop of just over 15%. I suggest a stop at $66.50.
— Rick Pendergraft
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