Stocks performed a lot better on Tuesday than they did on Monday. The indices opened higher and then trended higher throughout most of the day. There was a slight dip near the end of the day that kept them from closing at their highs of the day.
The Russell led the way with a gain of 1.71% and it was followed by the Nasdaq which gained 0.95%. The S&P moved up 0.71% and the Dow tacked on 0.55%. The Dow was the only one that was in negative territory at any point during the day.
Nine of the 10 sectors moved higher with utilities being the lone sector to lose ground, but that was only a loss of 0.02%.
The energy sector jumped 4.54%, making it the top performer by a wide margin. The materials sector gained 2.23% as the second leading performer and the industrial sector moved up 1.0% to give us three sectors with gains of at least 1.0%.
My scans were even again last night and that is the second time in the last four days. There were 18 bullish signals and 18 bearish signals.
The barometer did edge up a little, moving from -16.9 to -11.2 thanks to the neutral reading from the scans.
Today’s trade idea is a bullish one and it is on an energy company. Enterprise Products Partners (NYSE: EPD) appeared on the bullish list and the pipeline company has pretty strong fundamental ratings. The EPS rating is a 74 and the SMR rating is a B.
As you can see on the chart, the stock rallied sharply from the end of September through the December high. A pullback over the last few weeks has brought the stock down to the 50-day moving average and there is a trend line that connects the lows from October and November with the low from this week. The stochastic indicators are in oversold territory and made a bullish crossover last night.
Buy to open the February 18-strike calls on EPD at $2.15 or better. These options expire on February 19, 2021. I suggest a target gain of 100% and that means the stock will need to reach $22.30. That is slightly higher than the December high, but I believe the stock can get there. I recommend a stop at $18.60.
— Rick Pendergraft
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