The indices made a complete reversal on Tuesday from their results on Monday. The Russell was the only one in the black with a gain of 0.02% while the other three moved lower on the day. The Nasdaq took the biggest hit at 0.43% while the S&P dropped 0.34%. The Dow only fell 0.09%.
Seven of the 10 main sectors declined on Tuesday. The energy sector led the way lower for a second straight day with a loss of 1.06%. The tech sector was in the spotlight with executives testifying before Congress and the sector fell 0.93% during the process.
[hana-code-insert name=’adsense-article’ /]The industrial sector was the top performer on the day with a gain of 0.64%.The materials sector moved up 0.24% as the second best performer while the consumer staples sector gained 0.03% as the third group in positive territory.
My scans reversed course on Tuesday and we saw a more negative skew again.
There were 64 names on the bearish list and 12 on the bullish list.
The barometer had been inching toward a positive reading through Monday, but it dropped back down to -21 after the results above were added in to the equation.
With the abundance of stocks on the bearish list, I have another bearish trade idea for you today. Philip Morris International (NYSE: PM) appeared on the bearish list last night and the company is scheduled to release earnings on Thursday. The EPS rating isn’t bad at 60, but there isn’t an SMR rating because the ROE isn’t calculable.
The daily chart shows that the stock has been trending lower over the last four months with a trend line connecting the highs from March, May, and in the last few days. The stock is in overbought territory based on the daily stochastic readings and the indicators just made a bearish crossover.
Buy to open the September 82.50-strike puts on PM at $3.20 or better. These options expire on September 20. In order for these options to double the stock will need to drop to $76.10. The stock fell below the $76 level and bounced around the area for an extended period in June. The stock won’t need to break below that area in order to double. I suggest a target gain of 100% with a stop at $82.30.
— Rick Pendergraft
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