It was another mixed day for stocks on Tuesday as the indices fluctuated quite a bit. The Nasdaq and S&P were higher at the open while the Dow and Russell were lower. Neither the Dow nor the Russell would make their way in to positive territory during the day, but both the Nasdaq and S&P did fall in to negative territory in the afternoon.

The Nasdaq would end up moving higher once again and finishing with a gain of 0.09%, but the other three indices all finished in the red. The Russell took the worst hit with a loss of 1.71%. The Dow fell 0.39% and the S&P dropped 0.16%.

Looking at the sectors, they were mixed on the day with six moving lower and four moving higher. The energy sector was the worst performer with a decline of 2.87%. The industrial sector dropped 1.44% as the second worst performer.

The communication services sector led the way with a gain of 1.01% and it was followed by the tech sector with a gain of 0.79%.

My scans turned decidedly more bearish last night with 126 bearish signals and not a single bullish signal.

The barometer dropped from -34.3 to -72.5 once these results were added in to the equation. This is the lowest reading since February 12 and that low reading came just ahead of the one month decline in the S&P.

Obviously today’s trade idea is a bearish once since there weren’t any bullish signals. There were a number of them that caught my, but I felt the best odds of success were on Cleveland-Cliffs (NYSE: CLF). The company only scores a 19 on the EPS rating, but it scores a B on its SMR rating.

The daily chart shows how the stock has been trending slightly lower over the last three months, after experiencing a big run up in November and December. The highs from January and February connect to form a downward sloped trend line and the stock high it a few days ago.

Buy to open the May 17-strike puts on CLF at $2.65 or better. These options expire on May 21, 2021. I suggest a target gain of 75% and that means the stock will need to drop to $12.35. I recommend a stop at $17.25.

— Rick Pendergraft

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