There was an attempt at a rally on Wednesday, but the indices weren’t able to hold on to their early gains. All four indices opened higher and were sitting on some decent gains in to the afternoon session, but all of them dropped after the lunch hour. The Nasdaq did manage to hang on for a small gain of 0.17%.
The other three indices ended up with losses with the Russell taking the worst hit with a decline of 1.22%. The Dow fell 0.46% and the S&P dropped 0.38%.
Only one sector managed to log a gain and that was the tech sector.That explains how the Nasdaq managed to post a gain.
The healthcare sector was the second best performer with a loss of only 0.01%.
On the downside, the energy sector got hit hard yet again.
The sector dropped 3.02% and it was the third straight day the sector was the worst performer. The sector is now down 11.58% for the week.
The utilities sector fell 1.01% and that was the only other sector that lost more than 1.0%.
My scans didn’t produce very many signals for the second straight night. There were only three names on the bullish side and only one on the bearish side. That broke the string of eight straight days of negative results.
The barometer continued to climb and finished with a reading of -7.4 on Wednesday.
With only four stocks to choose from between the two lists, I didn’t find any trade setups that I liked from the scans. I did however like the fact that the tech sector moved higher while all the other sector ETFs fell. Therefore, today’s trade idea is a bullish one on the Technology Select Sector SPDR (NYSE: XLK). The ETF did get a bullish signal from Tickeron’s A.I.dvisor on Wednesday and past signals have been successful 90% of the time.
The 10-day RSI and the daily stochastic indicators both hit oversold territory this week and that is the first time since August that both indicators have been there. The RSI turned upward slightly yesterday and that leads me to believe we may see a bounce in the sector and perhaps in the overall market.
Buy to open the April 92-strike calls on XLK at $4.60 or better. These options expire on April 17. In order for these options to double the fund will need to reach $101.20. The fund was up above $102.50 before the drop in the last week. I suggest a target gain of 100% with a stop at $91.00.
— Rick Pendergraft
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