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The sharp rebound rally we’ve seen seems to me to be more than just an ordinary “dead-cat bounce” because of how oversold stocks had gotten. The Nasdaq and the Dow Jones have now both recovered more than 50% of the recent losses, while the S&P 500 is lagging a bit. It’s possible that the market has made a short-term bottom, but we’ll have to wait to see what the volume figures are over the next few days to determine how much conviction traders really have in this rebound.
The major concern for the longer-term is that there is a “debt bomb” waiting to detonate at some point down the road, plus stocks like Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX) are still overvalued, even after the pullback.
However, on a shorter-term basis, it’s usually a buy signal when the CBOE Volatility Index (INDEXCBOE:VIX) gets above the 30 level. According to my research, when the VIX gets to 30 or higher, the resulting return in the market is about 5% over the following three months. It’s worth looking for quick profits in the better-performers, and to that end, today I’m recommending calls on Logitech International SA (USA) (NASDAQ:LOGI).
Buy to open the LOGI Jun 45 Calls (LOGI180615C00045000) at $1.40 or lower.
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