The indices gave back some of the big gains from Monday, in fact they gave back over half as stocks turned lower after the Fed made an emergency 0.5% cut to the Fed Funds rate. The action seemed to worry investors more than it did to calm investors. Prior to the announcement the indices were trading near their breakeven points on the day.
The Nasdaq took the worst hit with a drop of 2.99% and it was followed closely by the Dow with a loss of 2.94%. The S&P fell 2.81% and the Russell only dropped 2.13%.
All 10 main sectors lost ground on the day, but the degree of declines was rather different.The materials sector took the smallest loss at 0.91% and it was followed by the utilities sector with a decline of 1.23%.
The tech sector recorded the biggest loss at 3.8% and the financial sector was right behind it with a loss of 3.76%.
Overall there were four sectors that dropped more than 3%.
My scans continued to produce positively skewed results last night, but the total number of bullish signals was much lower. There were 33 names on the bullish list and not a single signal from the bearish scan.
After the two huge bullish days in a row, the barometer fell a little last night. The indicator dropped from 198.9 to 150.5.
Today’s trade idea is the fifth straight bullish one, but it is on a stock I haven’t recommended before and it is from a sector I haven’t recommended in a while. The company is TC Energy (NYSE: TRP) and it is from the energy sector. The company scores a 71 on its EPS rating and a B on its SMR rating.
We see on the daily chart how TC Energy has been trending higher with the lows from August and November creating a trend line. The stock hit that trend line last Friday and bounced from there. We also see that the daily stochastic readings and the RSI hit oversold territory recently and have since turned higher. The last time we saw both indicators hit oversold territory was last August and it was right before the stock went on a big run.
Buy to open the April 50-strike calls on TRP at $4.20 or better. These options expire on April 17. In order for these options to double the stock will need to reach $58.20. The stock peaked at $58 back in February, so it will need to challenge and possibly take out that high to reach our goal. I suggest a target gain of 100% with a stop at $50.90.
— Rick Pendergraft
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