After experiencing one of the best days in months on Monday, stocks gave back a big part of the gains on Tuesday. All four indices would finish in the red and only the Dow saw positive territory at any point. The worst part is that they closed at the lows of the day.
The Russell took the worst hit with a loss of 1.93% and the Nasdaq followed that with a drop of 1.69%. The S&P declined 0.81% and the Dow fell 0.46%.
Nine of the 10 main sectors lost ground on Tuesday with only the materials sector moving higher (+0.56%). The second best performance was a loss of 0.17% by the consumer staples sector.
The tech sector suffered the worst loss at 1.59% and the consumer discretionary sector fell 1.15% as the only other one to lose more than 1.0%.
My scans turned decidedly more positive last night with 116 bullish signals and two bearish signals.
The barometer jumped to 50.6 from 6.7 once these results were added in to the equation.
With so few bearish signals, it shouldn’t come as a big surprise that today’s trade idea is another bullish one. This time the subject company is Carlyle Group (Nasdaq: CG). In addition to appearing on the bullish list, the company has good fundamental indicators. The EPS rating is 71 and the SMR rating is an A.
We see on the chart that a trend line connects the lows from October and January, and the stock just hit that trend line before bouncing higher. The stochastic indicators made a bullish crossover last night and when this happened in October and January we saw substantial gains over the next month or two.
Buy to open the April 34-strike calls on CG at $2.95 or better. These options expire on April 16, 2021. I suggest a target gain of 100% and that means the stock will need to reach $39.90. That would mean a new high for the stock, but it would mean a move off the low of about 20%, like we saw from late January through mid-February. I recommend a stop at $33.30.
— Rick Pendergraft
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