Stocks were mixed on Monday with two indices moving higher and two moving lower. Three of the four opened higher, but the Nasdaq was the only one that remained in positive territory throughout the day. It would also finish with the biggest gain at 0.98%. The S&P gained 0.23% thanks to a late rally.
The Russell opened in positive territory, but moved in to negative territory early on and finished with a loss of 0.52%. The Dow opened lower and remained in negative territory all day, finishing with a loss of 0.44%.
On the sector front we saw six move higher, one unchanged, and three moved lower. The communication services sector led the way with a gain of 1.13 and it was followed by the tech sector with a gain of 1.05%. Those were the only two with gains over 1.0%.
The energy sector got hit hard and lost 3.38% on the day. The financial sector dropped 0.73% and the industrial sector fell 0.53%.
My scans turned in another result on Monday with 47 bearish signals and 20 bullish signals. This is the third straight negative result from the scans.
The barometer moved back in to negative territory with a reading of -14.6. Friday night’s reading was 12.1.
After all the bullish trade ideas last week, I have a second straight bearish idea for you today. There were a number of stocks that got my attention on both sides of the ledger, but I felt the best opportunity was on Lyft Inc. (Nasdaq: LYFT). The stock was on the bearish list and the company’s fundamentals aren’t very good. The EPS rating is 19 and the SMR rating is an E.
We see on the chart that the stock has been trending lower, but the trend line that connects the highs isn’t very steep. Both the RSI and stochastic indicators were in overbought territory, but declines in the last two days have caused the RSI to move down. The stochastic indicators made a bearish crossover last night.
Buy to open the August 60-strike puts on LYFT at $5.15 or better. These options expire on August 20, 2021. I suggest a target gain of 75% and that means the stock will need to drop to $51. LYFT dropped down below $46 in May, but the $51 area acted as resistance in December and January, and that area could now act as support. I suggest a stop at $62.60.
— Rick Pendergraft
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