Stocks were mixed on Monday with three of the four indices losing ground. The Nasdaq rose 0.45% as the only one that finished in the black on the day and it was in positive territory for the entire day.
The Russell spent part of the day in positive territory, but would end up dropping 0.06% on the day. The S&P fell 0.19% and the Dow dropped 0.49%, both of these indices were in the red for the entire day.
Seven of the 10 sectors lost ground on Monday with the energy sector falling 2.34% as the worst performer. The financial sector lost 0.69% as the second worst performer and materials fell 0.65%.
The communication services sector led the way with a gain of 0.63% and it was followed by the utilities sector with a gain of 0.56%. The tech sector moved up 0.29% as the third sector to finish in positive territory.
After one day of positive scans, they flipped back to the negative side on Monday. There were 71 bearish signals and 17 bullish signals on the day.
The barometer dropped to -28.3 thanks to the decidedly bearish slant to the scans. The final reading on Friday was -15.6
With the bearish skew to the scans and after a couple of bullish trade ideas in a row, I have a bearish idea for you today. Pluralsight (Nasdaq: PS) was one of the companies on the bearish list and its fundamental indicators aren’t all that great. The EPS rating is slightly below average at 42 and the SMR rating is a D.
We see on the chart how the stock has been trending lower over the four months with a trend channel forming that defines the different cycles within the downward trend. The stock is right at the upper rail currently and the stochastic readings are in overbought territory. The indicators made a bearish crossover last night. I look for the stock to make its next move lower in the coming weeks.
Buy to open the January 20-strike puts on PS at $2.65 or better. These options expire on January 15, 2021. I suggest a target gain of 100% and that means the stock will need to drop to $14.70. The stock was down below the $14.50 level in early November, so it won’t have to break that low to hit our target. I recommend a stop at $19.00.
— Rick Pendergraft
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