Stocks roared back from Tuesday’s losses with huge gains on Wednesday. For the second time this week the Dow gained more than 1,000 points as it gained 4.53% on the day. That performance was the top one for the indices. The S&P logged a gain of 4.22% as the second best performer.
The Nasdaq moved up 3.85% on the day and the Russell lagged with a gain of 3.04%. It’s been interesting watching the Russell this week. It didn’t move up as much as the other indices on Monday, didn’t fall as much on Tuesday, and lagged again on Wednesday.
All 10 main sectors moved higher on the day with two moving up more than 5%.The healthcare sector led the way with a gain of 5.76% and the utilities sector tacked on 5.67%.
The energy sector posted the smallest gain at 2.37% and the financial sector had the second smallest gain at 3.31%.
It is interesting that the defensive sectors led the way and the more speculative sectors lagged.
After the huge bullish readings over the last three days, it was bound to happen that my scans would slow down. Last night there were only five stocks on the bullish list and one on the bearish list.
The barometer continued to drop from its all-time high and came in with a reading of 87.4 on Wednesday.
There weren’t any stocks among the six on the two lists that I liked so I went to my weekly charts. One company I like really well is Keysight Technologies (NYSE: KEYS). The electronic design firm gets a 92 on the EPS rating system and an A on the SMR grading system.
The weekly chart shows how the stock has been trending higher over the last year and a half with a trend channel defining the various swings within the overall upward trend. The stock is sitting on the lower rail right now. We see that the weekly stochastic indicators were in oversold territory before making a bullish crossover a few weeks ago. Similar signals occurred in the fourth quarter of 2018 and again in May of ’19 with the stock rallying nicely in each instance.
Buy to open the April 95-strike calls on KEYS at $6.70 or better. These options expire on April 17. In order for these options to double the stock will need to reach $108.40. The stock peaked at $110 back in November, so the stock won’t have to reach a new high for us to reach our goal. I suggest a target gain of 100% with a stop at $95.
— Rick Pendergraft
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