As news broke of a possible deal in the trade talks between the U.S. and China, stocks soared on Friday. The details of the deal weren’t available before the close on Friday and indications are that nothing was resolved in terms of intellectual property rights. Regardless, investors felt confident in the fact that some progress was being made.
All four main indices gained over 1.0% on the day with the Russell jumping 1.79% to lead the way. The Nasdaq tacked on 1.34% for the second best performance while the Dow gained 1.21%.
[hana-code-insert name=’adsense-article’ /]The S&P moved up 1.09% as the laggard of the bunch.It should be noted that the indices did dip in the closing minutes.
Eight of the 10 main sectors moved higher on Friday with the defensive sectors moving lower.
The utilities sector fell 0.37% and consumer staples dropped 0.10%.
Seven of the eight sectors that moved higher gained at least 1.0%.
The materials sector led the way with a gain of 1.94% and it was followed closely by the industrial sector with a move of 1.88%.
With the huge move to the upside, my scans turned in a big positive result on Friday with 109 names on the bullish list and five on the bearish list.
The barometer jumped from a reading of 4.5 on Thursday to a reading of 42.2 on Friday night.
Despite the abundance of names on the bullish list, there weren’t a great number of stocks that really caught my attention. One stock that did was Evergy (NYSE: EVRG). The utility company scores a 63 on its EPS rating and a B on the SMR rating.
The daily chart was what really caught my attention as the stock has been trending higher in the last four months and a trend channel has formed. The stock dipped below its 50-day moving average this past week and it did so back in August as well, but the stock then rallied 11.5% in less than a month.
Buy to open the December 60-strike calls on EVRG at $4.90 or better. These options expire on December 20. In order for these options to double the stock will need to reach $69.80. If we get a similar move this time as to what we saw in August, the stock will be right at the $70 mark. I suggest a target gain of 100% with a stop at $62.50.
— Rick Pendergraft
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