The indices were split two and two again on Tuesday with two moving higher and two moving lower. It was kind of strange though because the moves got stronger heading in to the close.
The Russell led the way with a gain of 0.99% and the Nasdaq moved up 0.51%. Both rallied in to the close and closed near their highs.
The Dow fell 0.67% and was the worst performer on the day. It sold off in to the close and closed at its low of the day. The S&P fell 0.21%, but it managed to move up a little toward the end of the day.
Nine of the 10 sectors moved lower on the day with only the tech sector moving higher. The group moved up 0.82%.
The energy sector was the worst performer once again and fell 1.68% on Tuesday. This is the fourth straight day the sector has been the worst performer. The only other sector that lost more than 1.0% was the financial sector which fell 1.01%.
My scans remained negatively skewed last night, but the difference between the two lists did close a little. There were 38 bearish signals and eight bullish signals.
The barometer ticked down a notch once these results were added in to equation, falling from -48.1 to -48.2.
Today’s trade idea is a little different. It is a bearish trade, but the fundamental ratings for the company are actually pretty good. That seemed to be a theme on the bearish list last night. The company is Citrix Systems (Nasdaq: CTXS) and its EPS rating is 79 and the SMR rating is an A. Obviously if the fundamentals are good, the chart has to present a bearish case.
What jumped out at me on the chart was the trend line that has formed since the stock gapped lower in July. The high from the day of the gap connects with the high from October to form the line. The stock just hit this trend line a few days ago and it appears to have acted as resistance. I look for the stock to make its next move lower in the coming weeks.
Buy to open the February 140-strike puts on CTXS at $11.40 or better. These options expire on February 19, 2021. I suggest a target gain of 75% and that means the stock will need to drop to $120.o0. The stock was down below $115 in November, so it won’t have to break that low to hit our target. I recommend a stop at $136.50.
— Rick Pendergraft
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