Stocks opened pretty sharply lower on Wednesday and all four indices had considerable losses in the morning session. Momentum did shift before midday and all four were able to erase most of the declines.
The Nasdaq roared back more than the others and finished with a very small loss of 0.03%. The S&P dropped 0.29% and the Dow declined 0.48%. The Russell didn’t rally as much as the others and finished with a loss of 0.78%.
Like the indices, the sectors were all down in the early going and would turn higher around midday. Two sectors were able to make it to positive territory while eight still finished in the red. The tech sector rallied for a gain of 0.36% and the communication services sector eked out a gain of 0.16%.
The energy sector finished with a loss of 2.62% and was the worst performer for a second straight session. The materials sector fell 1.53% and was the only other sector to lose more than 1.0%.
My scans turned decidedly negative last night with 88 bearish signals and only three bullish signals.
The barometer plummeted all the way to negative territory once the results from last night were added in to the calculation, falling from 53.7 to -2.4.
I have a second straight bearish trade idea for you today and that shouldn’t be a big surprise given the abundance of bearish signals generated last night. Today’s subject is Halliburton (NYSE: HAL) and not only did it appear on the bearish list, but it has poor fundamental ratings. The EPS rating is 23 and the SMR rating is a D.
The thing that jumped out the most on the chart was the possible head-and-shoulders pattern. We had the first shoulder back in January, the head occurred at the high and March, and now the high two days ago could be the second shoulder. The other thing that stood out was how the stock fell below the 10-day moving average. If you look at the first two parts of the H&S pattern, the decline accelerated when the stock moved below the 10-day.
Buy to open the July 24-strike puts on HAL at $2.60 or better. These options expire on July 16, 2021. I suggest a target gain of 100% and that means the stock will need to drop to $18.80. The low in April was $18.35, so the stock won’t have to break to a new low to hit our target.
— Rick Pendergraft
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