Stocks bounced back from Tuesday’s selling with some pretty significant gains on Wednesday. All four indices moved higher with the Nasdaq leading the way with a jump of 2.13%.
The S&P gained 1.4% and the Dow moved up 1.05%. The Russell lagged the other indices but still tacked on 0.52%.
Nine of the 10 sectors moved higher on the day with six of them gaining over 1.0%. The tech sector jumped 2.27% as the top performer. The healthcare sector gained 1.68% as the second best performer and the utilities sector gained 1.45% for third place.
The financial sector fell 0.28% and it was the only one to lose ground. The industrial sector experienced the smallest gain at 0.32%.My scans produced yet another negative result last night, but the numbers weren’t near as bad as the night before. There were 58 bearish signals and 19 bullish signals.
The barometer actually moved up slightly because the numbers weren’t as skewed to the bearish side.
The final reading last night was -51.0, up from -54.6 the night before.
Even though there was a pretty big discrepancy between the two lists on Wednesday, I found several trade setups that I liked on both sides. Ultimately I liked a bullish trade idea on Amgen (Nasdaq: AMGN) the best. The company does very well with its fundamental ratings with an EPS rating of 89 and an SMR rating of an A.
We see on the chart how a trend channel has formed that goes back to the closing lows in March. Those lows connect with the lows in June to form the lower rail and the stock just bounced off of that rail. We also see that the stochastic indicators and the 10-day RSI were in oversold territory and just turned higher.
Buy to open the October 235-strike calls on AMGN at $13.85 or better. These options expire on October 16. I suggest a target gain of 100% and that means the stock will need to reach $262.70. The stock was up near $265 at the beginning of July so the stock won’t need to break to a new high to hit our target. I suggest a stop at $227.00.
— Rick Pendergraft
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