Stocks ended their two-day rally, or at least three of the four indices did. All four of the main indices moved higher at the open, but they turned lower in the morning session. By the end of the day only the Nasdaq was still in the black. The index logged a gain of 0.51% and that allowed it to lead the way for a third straight day.
The Dow was the worst performer on the day, losing 0.91%. The Russell dropped 0.82% and the S&P rounded out the losses with a decline of 0.70%.
Eight sectors lost ground on Wednesday while one was unchanged and one managed to move higher.The tech sector was the lone sector in the black with a move of 0.78%.
The consumer discretionary sector was the one that was unchanged.
There were three sectors that stood out on the down side.
The utilities sector dropped 3.4% and that was the worst loss of the day.
The energy sector fell 2.61% and the financial sector lost 2.16%. Those were the only three to lose more than 2.0%.
My scans were positive for a second straight night on Wednesday. There were 31 bullish signals and four bearish signals.
The barometer jumped from -35.4 to 1.1 once these stats were added in to the results. This is the first positive reading from the indicator since April 8.
After two straight bullish trade ideas, I have a bearish one for you today. With the April employment report coming out on Friday, I think some balance with the trades is in order. The company that caught my eye was Liberty Global (Nasdaq: LBTYA). The company reported earnings last night and it didn’t move in after-hours trading. Heading to the report, the company’s fundamental ratings were terrible. The EPS rating was a 19 and the SMR rating was an E.
The stock rallied sharply over the past week and has turned lower in the last few days. The 10-day RSI was extremely overbought at 80 and the last time it was up that high was last September—just before a drop of 16.5%. The stock also got close to its 52-week moving average before turning lower.
Buy to open the June 22.50-strike puts on LBTYA at $2.70 or better. These options expire on June 19. I suggest a target gain of 75% which means the stock will need to drop to $17.75 to hit our target. The stock was below $16 early in April. I suggest a stop at $22.90.
— Rick Pendergraft