Stocks moved higher on Friday with all four of the main indices opening higher and remaining in positive territory for the entirety of the day. The Dow led the way with a gain of 0.90%. The Russell finished with the second best gain at 0.78%. The Nasdaq moved up 0.59% and the S&P lagged the others with a gain of 0.46%.
Eight of the 10 main sectors moved higher on the day with the industrial sector turning the best performance with a gain of 1.75%.
[hana-code-insert name=’adsense-article’ /]The consumer discretionary sector tacked on 1.07% and that was good enough for second place.These were the only two sectors to gain over one percent.
The healthcare sector fell 1.11% and was the worst performer on Friday.
The utilities sector dropped 0.66% and was the only other sector that finished in the red on the day.
My scans ended their string of negative results at seven.
With 26 names on the bullish list and 20 on the bearish list, we had a positive skew of six on the day.
The barometer continued to climb from its low on Tuesday. The final reading was -12.5, up from -31.6 the night before.
Today’s trade idea comes from the bullish list and the subject is ON Semiconductor (Nasdaq: ON). The company has strong fundamental ratings with an 88 on the EPS rating scale and an A on the SMR rating. The company is scheduled to release earnings on July 29, so you will want to be prepared for that event.
The daily chart shows how the stock fell in May, but has been trending higher since the latter part of the month. We see that a short-term trend channel has formed and the stock has just bounced off of the lower rail as the stochastic readings hit oversold territory and reversed.
Buy to open the August 20-strike calls on ON at $1.25 or better. These options expire on August 16. In order for these options to double the stock will need to reach $22.50. That is slightly above then upper rail at this time, but the upper rail is moving higher and should be above our target in a few weeks. I suggest a target gain of 100% with a stop at $19.65.
— Rick Pendergraft
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