Stocks were mixed again on Tuesday and there was an interesting dip in the middle of the day that caused all four indices to drop rather sharply. Three of the four opened higher with only the Dow being down to open the day. The S&P dropped in to negative territory early on. All four indices dropped at 11:00 AM EST and the S&P dropped nearly a half percent.
The final results showed the Russell jumping by 1.13% and leading the way for a second straight day. The Nasdaq gained 0.31% and finished in second place for a second straight day.
The S&P gained 0.02% and the Dow lost 0.09% to round out the results.
As for the sectors, they were evenly split with five moving higher and five moving lower. The consumer discretionary sector led the way with a gain of 0.84% and it was followed by the energy sector with a gain of 0.79%.
The utilities sector fell 0.87% as the worst performer and the consumer staples sector was right behind it with a loss of 0.84%.
My scans remained negative on Tuesday, but the size difference between the two lists continued to narrow. There were 34 bearish signals and 23 bullish signals for a net reading of -11. This is the smallest negative spread since May 26.
The barometer moved up once again after these results were added in to the equation, rising to -38.0 from -58.5.
After a couple of straight bullish trade ideas, today’s trade idea is bearish one and it is on Luminar Technologies (Nasdaq: LAZR). Of course the stock was on the bearish list and it has poor fundamental ratings. The EPS rating is 15 and the company doesn’t have an SMR rating because it has been losing money and therefore doesn’t have an ROE.
The chart shows a downwardly sloped trend channel with the stock hitting the upper rail yesterday. I also found it interesting that yesterday’s high matched up with the high from April—a penny higher, but close enough. The stochastic indicators are in overbought territory and made a bearish crossover last night.
Buy to open the August 27.50-strike puts on LAZR at $2.92 or better. These options expire on August 20, 2021. I suggest a target gain of 100% and that means the stock will need to drop to $15.50. The target is below the recent low, but the lower rail is already well below that level. I suggest a stop at $27.30.
— Rick Pendergraft
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