The indices suffered their worst losses of 2021 on Wednesday. All four opened lower and they remained there throughout the day.
The Nasdaq took the biggest hit with a loss of 2.61% and it was followed by the S&P which fell 2.57%. The Dow dropped 2.05% and the Russell lost 1.91%.
All 10 sectors fell on the day and all of them dropped at least 1.0%. Three sectors lost over 3%, the communication services sector (-3.23%), the consumer discretionary sector (-3.08%), and the healthcare sector (-3.04%).
The energy sector flipped things around on Wednesday and it lost the least amount at 1.35%. The consumer staples sector fell 1.69% and that was the second best performer.
My scans turned in their fifth straight negative reading with 44 bearish signals and 13 bullish signals.
The barometer actually rose slightly once these figures were added in to the equation. It moved to -39.8 from -41.3.
With unbalanced nature of the lists, I have another bearish trade idea for you today. American Electric Power (NYSE: AEP) appeared on the bearish list and its fundamental ratings are only a little above average. The EPS rating is 68 and the SMR rating is a C.
We see that the stock has been trending lower since October and now it appears to be hitting resistance at its 50-day moving average. The stochastic indicators were in overbought territory for the first time since October, but they made a bearish crossover last night and moved out of overbought territory.
Buy to open the March 82.50-strike puts on AEP at $4.80 or better. These options expire on March 19, 2021. I suggest a target gain of 75% and that means the stock will need to drop to $74.10. The stock was below that level back in March, so it won’t have to reach a new 52-week low to hit our target. I recommend a stop at $83.00.
— Rick Pendergraft
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