Stocks moved higher again on Friday, continuing the rally that started in the second half of the day on Thursday. The September employment report was better than expected and that helped the rally.
Three of the four main indices gained over 1% with the Dow and S&P tying for the top spot with identical gains of 1.42%. The Nasdaq was right behind those two with a move of 1.4% while the Russell lagged a little with a gain of 0.97%.
[hana-code-insert name=’adsense-article’ /]All 10 main sectors moved higher for a second straight day and all but three of them gained over 1%.The financial sector led the way with a gain of 1.85% and it was followed by the tech sector with a gain of 1.65%.
The smallest gain belonged to the materials sector at 0.54%.
Energy gained 0.63% while the consumer discretionary sector moved up 0.94%.
Those were the three sectors that failed to gain at least 1%.
My scans were completely lopsided on Friday with 158 names on the bullish list and not a single stock or ETF on the bearish list.
That is the biggest positive skew since August 19. The barometer jumped to a reading of 100 even once these results were added in to the equation. The reading on Thursday was 52.3.
Obviously today’s trade idea is a bullish one, but I was a little surprised by how few trade setups jumped out at me. In the end I felt the setup for Boston Scientific (NYSE: BSX) made the most sense. The company scores a 77 on the EPS rating system and it gets an A in the SMR rating system.
We see on the chart that the lows from December, April, and October all connect nicely to form a trend line. I look for the stock to use this trend line as a springboard that propels it through the $44 area. Both the RSI and the stochastics were in oversold territory before turning higher in the last few days. The April low was the last time we saw that happen and the stock rallied sharply from there.
Buy to open the November 39-strike calls on BSX at $2.60 or better. These options expire on November 15. In order for these options to double the stock will need to reach $44.20. That is slightly above the resistance that has persisted in the last three months, but I look for the stock to break through this time. I suggest a target gain of 100% with a stop at $39.
— Rick Pendergraft
[hana-code-insert name=’investorplace-article2′ /]