All four of the main indices finished higher on Friday, but it took afternoon rallies by the Nasdaq and Russell to make that happen. The Dow and S&P both opened higher and stayed on positive territory throughout the day, but the other two struggled in the first half of the session.
The Dow would finish higher by 0.48% to lead the way and the S&P moved up 0.36%. The Russell surged in the afternoon to finish with a gain of 0.25% and the Nasdaq inched up 0.10%.
Seven of the 10 main sectors moved higher on Friday with the materials sector gaining 1.21% to lead the way. The utilities sector gained 0.81% to finish as the second best performer.
The energy sector dropped 0.80% as the worst performer. The communication services sector fell 0.07% and the tech sector lost 0.02% as the other two sectors that finished in the red.
My scans stretched the streak of negative readings to 10 days on Friday. There were 29 bearish signals and 13 bullish signals on the day.
The barometer moved a little higher after these results were added in to the calculation, rising to -36.1 from -48.0.
Today’s trade idea is a bearish one and the subject company is Callaway Golf (NYSE: ELY). The company has mixed fundamental ratings with an EPS score of 81 and an SMR rating of a C. The primary driver behind this trade idea is the pattern on the chart.
What we see on the chart is a downwardly sloped trend channel that has formed over the last two months. The highs from February and March connect to form the upper rail and the stock is hitting that rail at this time. We also see that the stochastic indicators reached overbought territory and made a bearish crossover on Friday and the indicators did the same thing in February and March.
Buy to open the June 31-strike puts on ELY at $3.30 or better. These options expire on June 18, 2021. I suggest a target gain of 75% and that means the stock will need to drop to $25.22. This target is slightly below the low in March, but above the lower rail of the channel. I suggest a stop at $30.75.
— Rick Pendergraft
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