Trade of the Day: EarthLink Holdings Corp. (NASDAQ:ELNK)

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Stocks shot higher last week, particularly on Tuesday and Wednesday, in response to…well…nothing, really. There was no news catalyst on either day, or even a whiff of one in the air. Stocks had apparently just become oversold on some metaphysical level, and buyers swooped in to take advantage – pushing the major indexes up around 2%.

Volatility was crushed at the same time, though not nearly as much as you would expect.

Normally you would expect the CBOE Volatility Index (VIX) to sink about eight to ten times more than the index advances. That would amount to a VIX decline of around 16%–20%, in this case. But, in reality, the VIX only fell 13.5%, which suggests that institutional investors held onto more of their safety blanket than usual.

We will see in the next few days if that turned out to be a good idea for them, or if they were being overly fretful. They usually turn out to be a bunch of overly risk-averse babies who regularly overpay for portfolio insurance. And if that is the case now, then the VIX could have further to fall in coming days…particularly if the broad market remains steady or rises a bit more.

Going into the rest of the spring and summer, my system suspects that Internet services providers are among the groups that generally should find their place in the sun after a long absence. Today I’m recommending one such stock: EarthLink Holdings Corp. (ELNK).

Trade of the Day: EarthLink Holdings Corp. (NASDAQ:ELNK)Buy ELNK at $6.45 limit, good till canceled.

Jon Markman operates the investment firm Markman Capital Insights. He also offers a daily trading advisory service, Trader’s Advantage, and CounterPoint Options, a service that helps individual traders make steady, consistent profits with volatility-related instruments. Follow him on Twitter for his latest take on markets and innovation.


Article printed from InvestorPlace Media, https://investorplace.com/2016/05/trade-of-the-day-earthlink-holdings-corp-nasdaq-elnk/.

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