Friday brought us yet another day of mixed results for the indices. This time it was the Nasdaq and Russell moving higher while the Dow and S&P moved lower. The Nasdaq was the only one of the four that started in positive territory, but it moved in to negative territory early on before finally turning higher. It would finish with a gain of 0.76% while the Russell actually led the way with a gain of 0.88%.
The Dow never saw positive territory on the day and it finished with a loss of 0.71%. The S&P spent the majority of the day in positive territory, but a late batch of selling caused it to finish with a loss of 0.06%.
We saw mixed results from the sectors on Friday as well. There were six that moved higher and four that moved lower. The communication services sector led the way with a gain of 0.87% and it was followed by the consumer discretionary sector with a gain of 0.60%.
The financial sector was the worst performer with a drop of 1.16%. The fall came as the Fed announced it won’t extend the break in reserve requirements that were implemented to boost the economy last spring. The industrial sector was the second worst performer with a drop of 0.76%.
My scans remained negative on Friday, but the size of the disparity was much lower. There were 29 bearish signals and seven bullish signals on the day.
The barometer rose quite a bit, but it remains pretty low at this time. The final reading came in at -92.9 and that was up from -129.3 on Thursday.
None of the bullish signals looked all that great to me so I have a fourth straight bearish trade idea today. This time the subject company is ProLogis (NYSE: PLD). The company’s fundamental ratings are mixed with the EPS rating below average at 39. The SMR rating is an A.
Looking at the chart we see the stock formed a bearish engulfing pattern on Friday and the stochastic indicators made a bearish crossover out of overbought territory. We’ve seen a few other instances of this pattern over the last four months or so and it has been a pretty good bearish indicator.
Buy to open the May 105-strike puts on PLD at $6.80 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 $93.10. The stock was down below the $93 level as recently as January. I recommend a stop at $104.10.
— Rick Pendergraft
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