Stocks got off to a good start after the long weekend with all four of the main indices opening higher. The optimism didn’t last long after the ISM Manufacturing index disappointed investors and two of the indices dropped in to negative territory before Noon. Those two were the Nasdaq and S&P and they would both finish with small losses. The Nasdaq dropped 0.09% and the S&P declined 0.05%.
The Russell didn’t really turn lower at any point during the day and finished with a gain of 1.14%. The Dow held on for a gain of 0.13%.
The sector activity was interesting in that I keep them in a folder on Yahoo Finance and they are alphabetized by the tickers. The top five all moved higher and the bottom five all moved lower. It was kind of strange to see.
On the plus side the energy sector was the top performer with a gain of 3.89% and it was followed by the materials sector with a gain of 1.36%.
On the down side, the healthcare sector fell 1.63% as the worst performer and it was the only one to lose more than 1.0%. The utilities sector dropped 0.61% as the second worst performer.
My scans were negatively skewed for a fifth straight night and they went deeper in to negative territory. There were 60 bearish signals and 16 bullish signals generated on Tuesday night.
The barometer fell to -26.6 from -14.5 once these results were added in to the equation.
Given the abundance of stocks to choose from on the bearish list, I have a bearish idea for you today. Ballard Power Systems (Nasdaq: BLDP) appeared on the list and it has terrible fundamental ratings. The EPS rating is 16 and the SMR rating is an E.
We see on the chart how the stock has been trending lower with a trend channel defining the cycles within the overall downward trend. The stock is up near the upper rail of the channel which is right around $18.25 currently. The interesting thing about that price level is that it was the pre-gap low back in April. This could mean the stock faces two different forms of resistance in the same area.
Buy to open the August 18-strike puts on BLDP at $3.30 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 $13.20 or so. The stock was down below $13 at the low in May, so it won’t have to break below that low. I suggest a stop at $18.75.
— Rick Pendergraft
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