Stocks bounced back from Monday’s selling with gains to close out 2019. All four of the indices moved higher and trading was light once again.
The disparity between the gains was much smaller than we are used to seeing. The Nasdaq led the way with a gain of 0.30% while the S&P gained 0.29% as the second best performer. The Dow gained 0.27% and the Russell moved up 0.26%.
Nine of the 10 sectors moved higher on the day with the industrial sector (-0.06%) being the lone one in the red.The materials sector was the biggest winner on Tuesday with a gain of 0.74%.
The energy sector tacked on 0.57% and that was good enough for the second best gain.
My scans remained negative on Tuesday, but the disparity narrowed significantly.
There were 21 names on the bearish list and 11 on the bullish list.
The barometer moved up quite a bit after the results were added in to the equation.
The final reading came in at -29.2, up from -45.2.
After five straight bearish trade ideas, I have a bullish one for you today. Aflac (NYSE: AFL) appeared on the bullish list and the fundamental ratings are decent. The EPS rating is a 78 and the SMR rating is a C. The ROE and profit margin are good, but what brings the rating down to a C is the sales growth.
On the chart we see that Aflac has been trending higher since August, but what really caught my eye was the trend line connecting the closing lows from October and December. This trend line is right at the $52.50 level and that area seemed to act as support last week after serving as resistance in August and September.
Buy to open the February 52.50-strike calls on AFL at $1.60 or better. These options expire on February 21. In order for these options to double the stock will need to reach $55.70. The stock will need to break above the high from November for these options to double, but it won’t have to set a new 52-week high. I suggest a target gain of 100% with a stop at $52.35.
— Rick Pendergraft
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