Tuesday turned out to be a frustrating day for bulls as all four indices opened in positive territory, but then turned negative at various points during the day. All four indices would close at their lows of the day.
The Nasdaq and Russell held up the longest and didn’t move in to negative territory until the final few hours. The Nasdaq would finish with the smallest loss at 0.56% while the Russell fell 0.73%, the second smallest loss.
The Dow spent the most time in negative territory and it would finish with a drop of 0.78%. The S&P experienced the worst loss at 0.85%.
Nine of the 10 sectors would finish in the red with only the healthcare sector finishing in the black. The sector only gained 0.03%, but it was a gain never the less.
The energy sector flipped from top performer to worst performer from Monday to Tuesday and the returns were the exact opposite figures—up 2.32% on Monday and down 2.32% yesterday. The industrial sector dropped 1.46% as the second worst performer and there were five sectors that lost more than 1.0%.
My scans saw a dramatic drop in bullish signals last night with only 15 being generated after 110 on Friday and 92 on Monday. There were seven bearish signals generated on Tuesday.
The barometer dropped from 69.2 to 53.7 once the results were added in to the calculation.
After three straight bullish trade ideas I have a bearish one for you today. Viatris Inc. (Nasdaq: VTRS) appeared on the bearish list and it has mixed fundamental ratings. The EPS rating is below average at 30, but the SMR rating is above average with a B grade.
There isn’t a particular pattern that jumps out, no trend lines or channels, but the biggest thing that jumped out at me was the incredibly high RSI reading. The indicator had almost reached 90 before turning lower yesterday and that is the highest it has been since January 2018.
Buy to open the July 17.50-strike puts on VTRS at $2.00 or better. These options expire on July 16, 2021. I suggest a target gain of 100% and that means the stock will need to reach $13.50. The stock was down at the $13 level in April, so it won’t have to break to a new low to reach our target. I suggest a stop at $16.90.
— Rick Pendergraft
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