U.S. equities rebounded from sharp declines Tuesday morning, as the Bank of Japan failed to expand its stimulus measures and investors continued to speculate over the Fed’s tapering of asset purchases. There was some unfounded speculation that the Federal Reserve might embark on QE3 “tapering” a lot sooner than expected — e.g. at the June meeting.
Stocks were stuck in the eye with a sharp stick following disappointments in overnight market developments in Japan and Europe. Over in Tokyo, the Bank of Japan failed to expand stimulus measures as investors had expected. In Europe, the German Constitutional Court hearings on the legality of emergency bailout funds were also a concern.
I have a lot of great ideas on the short side of the market should the recent jitters prove themselves to be well founded. However, certain stocks can actually benefit from nervous traders reacting to the news.
Click to EnlargeSplunk (SPLK) provides advanced, unique analytics on big data, which is all the information that companies and governments accumulate during the course of their business. The value of big data applications has come into focus with the revelations of the massive domestic spying operations underway by the National Security Agency. The stock was one of the strongest in the technology sector on the day, though it ended the session flat.
Recommendation: Buy SPLK at current levels for a $46.50 target.
InvestorPlace advisor Jon Markman operates the investment firm Markman Capital Insight. He also writes a daily swing trading newsletter, Trader’s Advantage, which aims to capture profits of 15% to 40% and often as much at 100% to 200% in less than 90 days.
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