Stocks finally saw some upside movement on Friday after the government stepped in and announced fiscal stimulus packages as well as gave updates on the steps it is taking to curb the spread of the coronavirus. All four of the main indices saw sharp gains on the day, but all four were still down sharply for the week.
The big three all saw gains in the same vicinity—Dow +9.36%, Nasdaq +9.35%, and S&P +9.29%. The Russell lagged the other three, but it still gained 7.77% on the day. The small-cap index took a hit of over 15% last week.
All 10 sectors moved higher on Friday with the financial sector seeing the biggest gain at 13.16%.The tech sector jumped 11.73% and those were the only two sectors that saw double-digit percentage gains on the day.
The smallest gain of the bunch was the utility sector with a gain of 5.45%.
My scans turned sharply more positive last night with 234 bullish signals and not a single bearish signal.
The barometer spiked again on Friday, much like it did on February 28.
The final reading for Friday night was 141, up from 72.6 on Thursday.
There was an abundance of stocks to choose from on the bullish list, but I went looking for stocks that had been able to remain above important trend lines or moving averages. One company that caught my eye was Fortinet (Nasdaq: FTNT). The software company scores a 99 on the EPS rating system and an A on the SMR grading scale.
We see on the weekly chart that the stock had a trend line connecting the lows from last June and last October. The stock dropped below the trend line during the week, but then it rallied to close right on the trend line Friday. The 10-week RSI hit oversold territory for the first time since early 2016 and that was when the stock was trading below $30 a share.
Buy to open the June 80-strike calls on FTNT at $13.70 or better. These options expire on June 19. In order for these options to double the stock will need to reach $107.40. The stock was up near $120 before the selloff hit, so it won’t have to reach a new 52-week high to hit our target. I suggest a target gain of 100% with a stop at $75.00.
— Rick Pendergraft
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