Stocks traded higher for most of the session on Tuesday and the Dow was up over 150 points at times, but rumors surfaced that China may walk back some of the trade concessions and that caused stocks to pullback in the afternoon.
By the end of the day all of the indices had slipped in to negative territory except the Nasdaq which managed to hang on to a gain of 0.12%. The Russell suffered the worst loss at 0.62%. The Dow slipped 0.10% and the S&P was only down 0.01%.
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The worst performance belonged to the utilities sector which dipped 1.16% and it was followed by the financial sector with a loss of 0.78%.
The healthcare sector was the top performer with a gain of 0.79% and it was followed by the consumer discretionary sector which tacked on 0.49%.
My scans continued to produce more bearish signals than bullish ones for a fourth straight night.
There were 48 names on the bearish side last night and 11 on the bullish side.
The barometer continued to fall as well and dipped to a reading of -34.4 from a reading of -28.2 on Monday.
Given how the tone changed at the end of the day yesterday and how the bearish list was considerably longer, today’s trade idea is a bearish one. The company is Tenaris (NYSE: TS) and it actually gets decent fundamental scores with an EPS rating of 67 and an SMR rating of a B, but the chart is what really got my attention.
The stock was trending lower within a trend channel before a huge collapse in November and December. The stock has rallied sharply since the end of December and is now bumping up against the previous upper rail. The stock is overbought on both its daily and weekly charts and the daily stochastic readings made a bearish crossover yesterday.
Buy to open the May $30-strike puts on TS at $2.60 or better. These options expire on May 17. The options will double if the stock falls to $24.80. That level is slightly below the low from March 8, but nowhere near the low of December or the lower rail of the channel. I suggest a target of 100% with a stop at $29.00.
— Rick Pendergraft
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