The volatile ride continued for stocks on Tuesday as they roared back after the massive selloff on Monday. President Trump announced initiatives he is proposing to help the economy in the wake of the corona virus and that had a big impact at the end of the day.
The indices opened higher, but slipped in the middle of the day only to soar higher in to the close. The Nasdaq led the way with a gain of 4.95% and it was followed closely by the S&P with a gain of 4.94%. The Dow moved up 4.89% to keep pace with the others, but the Russell only gained 2.85% and it spend a good portion of the day in negative territory.
All 10 sectors moved higher on Tuesday and there were some big gains from a number of them.In all, there were five sectors that moved up at least 5%, but the tech sector led the way with a gain of 6.68%.
The second best performance came from the financial sector at 5.92%.
The utilities sector was the worst performer and the only one that failed to gain at least 1.0%.
The group gained 0.99% on the day.
My scans turned in a strong positive reading with 118 names on the bullish list and eight on the bearish side.
The barometer jumped from 2.2 to 45.1 once these results were added in to the equation.
I have to admit, I went through all 118 stocks on the bullish list last night and they all pretty much looked the same. As a result I went to my weekly charts once again and this time I found a bullish setup that I liked. The company is Splunk (NYSE: SPLK) and it scores a 93 on the EPS rating system and an A on the SMR grading scale.
We see on the chart how Splunk has been moving higher over the last year and a half with a trend channel forming to mark the different cycles within the overall trend. The stock just hit the lower rail of the channel before bouncing higher on Tuesday. We also see that the stochastic readings have hit oversold territory and the last two times this has happened the stock has rallied sharply over the next two months.
Buy to open the May 125-strike calls on SPLK at $17.00 or better. These options expire on May 15. In order for these options to double the stock will need to reach $159.00. The stock was above the $170 mark in February so it won’t have to break to a new 52-week high to hit our target. I suggest a target gain of 100% with a stop at $122.00.
— Rick Pendergraft
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