Tuesday saw stocks get off to a bit of a rough start after the CDC and FDA recommended that the vaccine from Johnson & Johnson be halted from use. Futures turned sharply lower when that news hit in the pre-market. Two of the four indices opened substantially lower and a third moved in to negative territory shortly after the open. The only index that opened and remained in positive territory throughout the day was the Nasdaq and it finished with a gain of 1.05%.
The Dow opened sharply lower with Johnson & Johnson being one of the components and it finished with a loss of 0.20%. The S&P and Russell opened near breakeven with one higher and one lower, but they moved in different directions after the session got going. The S&P would finish higher by 0.33% and the Russell would finish down 0.21%.
As for the sectors, six were able to move higher on the day while four moved lower. The utilities sector led the way with a gain of 1.20% and the consumer discretionary sector rallied 1.07%. Those were the only two sectors that gained more than 1.0%.
The financial sector dropped 0.98% as the worst performer and the consumer staples sector lost 0.53% as the second worst performer.
My scans turned in their seventh straight negative result last night with 67 bearish signals generated and only 15 bullish ones.
The barometer changed very little once these results were added in to the equation, edging up to -44.5 from -45.9 on Monday.
I looked closely at the bullish signals, but there were so few on the list and most of the companies had poor fundamental ratings. That led me to a third straight bearish trade idea. This time the subject company is Xerox (NYSE: XRX). In addition to being on the bearish list, the company’s fundamentals are poor with an EPS rating of 25 and an SMR rating of a D.
The chart shows how Xerox peaked in early March and then turned considerably lower over a few weeks. The stock rallied back enough to move the stochastic indicators back up close to overbought territory, but now they made a bearish crossover last night after the stock has fallen in three of the last five trading sessions. I see the high from March and the high from last week creating a downward sloped trend line.
Buy to open the May 26-strike puts on XRX at $2.00 or better. These options expire on May 21, 2021. I suggest a target gain of 100% and that means the stock will need to drop to $22.00. That target is below the low in March, but not below the January low. I suggest a stop at $25.40.
— Rick Pendergraft
See What One Ticker... One Trade... EVERY WEEK... Can Do for YOU [sponsor]New research proves that trading one ticker every week has had the ability to produce extraordinary gains... Including a rare 2,614% in under 11 days. See this groundbreaking new discovery for yourself. SHOW ME ONE TICKER PAYOUTS