Wednesday started off with mixed results as two of the indices opened higher and two opened lower. By the end of the day, all four indices were in the red and almost all of the gains from Monday have been erased in the last two days.
The Nasdaq got hit the hardest with a drop of 2.7% and it was followed by the S&P with a loss of 1.31%. These were the two that started in the red and neither of them ever moved in to positive territory.
The Russell declined 1.06% and the Dow only lost 0.39% as a late selloff took it out of the black and in to the red.
Seven of the 10 main sectors dropped on Wednesday with the tech sector falling 2.52% for the worst loss. The consumer discretionary sector dropped 2.35% for the second worst performance and the only other loss greater than 2.0%.
The energy sector jumped 1.47% after the oil inventories report showed that the shutdown of refineries in Texas was still being dealt with. The financial sector rose 0.78% and the industrial sector inched up 0.11%.
My scans remained positive on Wednesday, but the size difference between the two lists was down tremendously. There were 42 bullish signals and seven bearish signals for a difference of 35, down from 114 on Tuesday.
The barometer continued to rise with last night’s results, climbing to 56.1 from 50.6.
After three straight bullish ideas, I have a bearish trade idea for you today. Even though there weren’t many to choose from on the bearish list, I liked the setup on Owens & Minor (NYSE: OMI). Of course the stock was on the bearish list, but it has mixed fundamental ratings with an EPS of 75 and an SMR of a C.
The stock attempted to break out, but has dropped back down below the $32 level that kept acting as resistance. What really jumped out at me was the last four instances where the stochastic indicators reached overbought territory and then experienced a bearish crossover. It has been a pretty reliable tool in the last few months.
Buy to open the April 32.50-strike puts on OMI at $3.40 or better. These options expire on April 16, 2021. I suggest a target gain of 75% and that means the stock will need to reach $26.55 to hit our target. The stock dropped all the way down below $24 in February, so it won’t have to break to a new low to hit our target. I recommend a stop at $34.75.
— Rick Pendergraft
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