Wednesday saw another mixed day for the indices with the Dow finishing higher by 0.20% while the other three were down on the day. The Russell fell 0.72%, snapping its seven-day winning streak.
The Nasdaq dropped 0.25% and the S&P lost 0.03% to round out the results.
Once again we had mixed results from the sectors with five moving lower, four moving higher, and one (the financial sector) finished unchanged. The energy sector was the top performer with a gain of 1.91% and the materials sector moved up 0.95%.
The consumer discretionary sector was the worst performer with a decline of 0.99%.
My scans turned more negative again last night with 140 bearish signals and 10 bullish signals.
The barometer dropped drastically when these results were added in, falling to -71.6 from -27.6.
Once again there were just too many options on the bearish list compared to the bullish list and so we have a third straight bearish trade idea. Today’s trade is on Melco Resorts & Entertainment (Nasdaq: MLCO). The company’s fundamental ratings are pretty bad with an EPS rating of 5 and a D on the SMR grading scale.
We see on the chart how the stock has been trending lower, but with pretty wild swings over the last nine months. There is a trend line that connects the highs from December and January, and I don’t think the stock breaks above that trend line in the next few months.
Buy to open the March 19-strike puts on MLCO at $1.95 or better. These options expire on March 19, 2021. I suggest a target gain of 100% and that means the stock will need to drop to $15.10. That target is slightly lower than the January low, but not down to the October low. I recommend a stop at $18.50.
— Rick Pendergraft
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