The market got off to a rough start on Thursday after the ISM Non-Manufacturing Index came in below estimates and below the August reading. The indices were all pushing losses of 1%, but they all rallied back to close with gains.
The Nasdaq led the way with a gain of 1.12% and it was followed by the S&P which moved up 0.80%. The Dow notched a gain of 0.47% and the Russell tacked on 0.42%.
[hana-code-insert name=’adsense-article’ /]All 10 main sectors moved higher on Thursday with two gaining over 1.0%.The tech sector led the way with a gain of 1.24% and the energy sector jumped by 1.17%.
The utilities sector posted the smallest gain at 0.24%.
The financial sector declined by 0.37% and it was followed closely with a gain of 0.38%.
My scans turned decidedly more positive on Thursday with 110 names on the bullish list and two on the bearish list.
The barometer jumped from 16.3 t0 52.3 once these results were added in to the equation. This is the highest reading since August 29.
With the scans being so one sided and the barometer jumping so much, today’s trade idea is a bullish one. I have recommended calls on Twitter (Nasdaq: TWTR) before and they have been successful. The company gets a 99 on the EPS rating system and an A on the SMR rating scale.
The daily chart shows an upwardly sloped trend channel with the stock hitting the lower rail yesterday. The daily stochastic readings are in oversold territory and made a bullish crossover last night. I look for the stock to rally sharply over the next month or so.
Buy to open the November 38-strike calls on TWTR at $2.60 or better. These options expire on November 15. In order for these options to double the stock will need to reach $43.20. That price is well below the recent high and below the upper rail of the channel. I suggest a target gain of 100% with a stop at $38.50.
— Rick Pendergraft
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