Three of the four main indices moved higher on Tuesday after three of the four opened higher. However, it wasn’t the same three in each case. The Nasdaq opened lower on the day, but it would bounce back to gain 0.19% and that was the biggest upside move.
The Russell opened higher, but it reversed lower and finished with the only loss at -0.58%. The Dow and S&P finished with matching gains of 0.03%, but both were in negative territory late in the day.
Given how three indices moved higher, it was a little surprising to see seven of the 10 sectors moved lower on the day. The tech sector led the way with a gain of 0.73%. The consumer discretionary sector gained 0.25% and the healthcare sector moved up 0.11%.
The utilities sector got hit the hardest with a loss of 1.62% and it was the only one that finished with a loss greater than 1.0%. The communication services sector dropped 0.54% as the second worst performer.
My scans turned in their fourth straight negative result on Tuesday with 35 bearish signals and 10 bullish signals.
The barometer dropped further in to negative territory once these results were added in to the equation. The final reading was -24.0, down from -14.6 on Monday.
After two straight bearish trade ideas, I have a bullish one for you today. MPLX LP (NYSE: MPLX) appeared on the bullish list and the energy limited partnership has mixed fundamental ratings. The EPS rating is above average at 69, but the SMR rating is average with a C rating.
The chart was the main driver behind this trade. We see how the stock has trended higher over the last nine months with a trend channel forming since the beginning of the year. It hit the lower rail of the channel on Monday and then bounced on Tuesday. We also see that the stochastic indicators touched the 20 level and made a bullish crossover last night. The indicators did the same thing in late December, late January, and late March. In each case the stock rallied over 20% within the next month or two.
Buy to open the August 27-strike calls on MPLX at $2.55 or better. These options expire on August 20, 2021. I suggest a target gain of 100% and that means the stock will need to reach $32.10. To reach our target the stock will only need to rally 13% from Monday’s low. I suggest a stop at $27.40.
— Rick Pendergraft
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