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While my indicators were giving neutral readings heading into this week, my personal view is that it’s time to start getting more bullish on the market. Therefore, I want to recommend a bullish trade on Popular, Inc. (NASDAQ:BPOP).
According to the most recent survey by the American Association of Individual Investors, only about 20% of respondents said they were bullish on the stock market.
There’s a lot of fear among individual investors. That’s an extremely low bullish reading, and as my regular readers know, the market tends to do the opposite of what most people expect. Therefore, I am taking the results of this survey as a contrarian indicator.
On the technical side, it looks to me that the market is forming what could be a complex, “triple bottom” pattern, which is also a bullish sign.
Daily Chart of S&P 500 Index (SPX) – Chart Source: TradingView
As you can see on the chart above, the index has made three low points since October to form the triple bottom, but it will need to trade above resistance around 2,800 before a breakout can be confirmed.
Daily Chart of Popular, Inc. (BPOP) – Chart Source: TradingView
BPOP is a financial holding company, and though the stock has been falling from its recent highs over the past few sessions along with the financial sector, it found some support just above the $50 level last week.
The stock is falling slightly below that level this morning, but there is also additional support just below at $49 per share.
I expect secondary support to hold and for the stock to turn around and head back toward its recent highs over the near term, which is why I’m recommending a bullish position.
Buy to open the Popular, Inc. (BPOP) Apr 18th (2019) $55 Calls (BPOP190418C00055000) at $2.00 or lower.
Note: The Good Friday holiday falls on April 19th, 2019. Because U.S. markets will be closed that day, April monthly options will expire the day before, on April 18th, 2019.
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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.