The indices were mixed on Monday with the Nasdaq and S&P both moving lower while the Dow and Russell moved higher. Inflation concerns and higher interest rates seem to be the biggest worry of investors. The Dow was the top gainer with a move of 0.97% while the Russell rallied by 0.49%.
As for the losses, the Nasdaq got hit pretty hard with a drop of 2.41%. The S&P fell 0.54% on the day.
Seven of the 10 main sectors gained ground on the day with utilities leading the way with a gain of 1.41%. The materials sector tacked on 1.34% and the financial sector gained 1.28%.
Tech stocks got hit the hardest and the sector tumbled 2.42%. The communication services sector fell 1.34% and the healthcare sector declined 0.29%.
My scans turned more positive on Monday with 87 bullish signals and 11 bearish signals. The bullish list was littered with technology stocks and ETFs, 36 in all.
The barometer jumped to 36.2 from 21.6 once these results were added in to the calculations.
Despite the overwhelming majority of signals coming from the bullish side, today’s trade idea is a bearish one. The subject company is Murphy Oil (NYSE: MUR) and it scores very poorly in the fundamentals. The EPS rating is only 8 and the SMR rating is an E.
The first thing that caught my attention on the chart was the bearish engulfing pattern from yesterday’s candlestick. Of course we see how extremely overbought the stock was with the RSI and stochastic indicators both above their respective thresholds before yesterday. The $20 level also stands out on the weekly chart because it has acted as both support and resistance in recent years.
Buy to open the April 20-strike puts on MUR at $2.85 or better. These options expire on April 16, 2021. I suggest a target gain of 75% and that means the stock will need to drop to $15 to hit our target. The stock was as low as $7 as recently as November. I recommend a stop at $20.75.
— Rick Pendergraft
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