The big bullish reversal that happened on Monday carried over to Tuesday and all four of the main indices experienced gains on the day. Stocks did roll over late in the day and the gains were trimmed considerably in the final hour of trading.
The Nasdaq led the way for a second straight day and Tuesday’s gain was 1.13%. The S&P moved up 0.90% and the Russell tacked on 0.75%. The Dow lagged the other three but still logged a gain of 0.56%.
Nine of the 10 sectors moved higher on the day with the healthcare sector gaining 2.13% to lead the way.The tech sector was the only other sector to gain more than 1.0% with a move of 1.38%.
The financial sector was the worst performer and the only one to finish in the red with a loss of 0.23%.
The energy sector only gained 0.08% and the consumer staples sector edged up 0.09%.
My scans turned positive last night with 18 bullish signals and six bearish signals.
That halts a streak of five straight days of negative readings.
The barometer jumped to -35.4, up from -70.3 on Monday.
There was a stock on each list that I considered for today’s trade idea, but in the end I decided to go with Akamai Technologies (Nasdaq: AKAM). The stock was on the bullish list and it scores an 86 on the EPS rating system and an A on the SMR grading scale.
The stock gapped lower after its earnings report, but it found support at its 50-day moving average and has now started to move higher again. The daily stochastic indicators didn’t quite make it down to oversold territory, but they made a bullish crossover last night. I look for the stock to rally again in the coming weeks and possibly hit a new record high.
Buy to open the June 95-strike calls on AKAM at $8.00 or better. These options expire on June 19. I suggest a target gain of 75% which means that the stock will need to reach $109. The stock peaked at $108.25 on April 20, so it will need to sneak past that high to hit our target, at least on an intrinsic basis. I suggest a stop at $94.00.
— Rick Pendergraft
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