After getting crushed on Wednesday and Thursday, stocks caught a bid on Friday and all four indices moved higher on the day. The gains varied greatly with the Nasdaq leading the way with a gain of 2.29% while the Russell was only able to gain 0.08%. The S&P notched a gain of 1.42% and the Dow gained 1.15%.
Nine of the 10 sectors moved higher on the day with the utilities sector being the lone one to lose ground with a loss of 0.11%.[hana-code-insert name=’adsense-article’ /]The tech sector got hit harder on Wednesday and Thursday, but it was the leading sector on Friday with a gain of 3.21%.
Three other sectors gained over one percent—consumer discretionary (+1.89%), telecom (+1.74%), and healthcare (+1.54%).
My scans turned decidedly bullish on Friday with 139 names on the bullish list and only one name (Papa John’s International- PZZA) on the bearish list. The barometer jumped to 56.7 from 8.5 thanks to the huge bullish list.
Given the discrepancy between the two lists, it stands to reason that today’s trade idea is a bullish one. The stock is Veeva Systems (NYSE: VEEV) and the software company has great fundamentals. The EPS rank from IBD is a 99 and the SMR rating is an A.
Looking at the chart of Veeva, you see that the stock has been trending higher since February and a trend channel has formed that connects the lows and the highs. Over the last few years, the stock has rallied from $20 in February of 2016 to over $100 in the last few months. The stock just hit the lower rail of the channel and we got a bullish crossover in the daily stochastic readings.
Buy to open the December $90-strike calls on VEEV at $8.50 or better. These options expire on December 21. These options will double, based solely on the intrinsic value when the stock hits $107. Given the sharp rallies in February and August, that seems like a reasonable expectation. I suggest a target gain of 100% with a stop at $88.00.
— Rick Pendergraft[hana-code-insert name=’Stans Melt Up 2′ /]