Stocks stretched their winning streak to three days on Tuesday with all four indices experiencing modest gains. The S&P led the way with a gain of 0.22% and it was followed by the Dow which tacked on 0.20%. The Nasdaq moved up 0.18% and the Russell gained 0.14%.
The sectors were mostly higher with seven of the 1o main indices moving up. The consumer staples sector topped the list with a gain of 0.81% and it was followed by the consumer discretionary sector with a gain of 0.68%.
[hana-code-insert name=’adsense-article’ /]The energy sector was by far the worst performer with a loss of 0.92%.The financial sector fell 0.10% and the healthcare sector dropped 0.08% as the other two sectors in the red.
The scans continued to produce more bullish signals than bearish signals with the tally from Tuesday night showing 23 names on the bullish side and 11 on the bearish side.
The barometer rose a little more, moving up to 19 from 13.4 on Monday night.
The stocks on the bearish list last night had really strong fundamental ratings for the most part, so today’s trade idea is another bullish one. Lam Research (Nasdaq: LRCX) appeared on the bullish list and has solid fundamental ratings with an EPS rating of 69 and an SMR rating of an A.
The daily chart shows how the stock has risen over the last six months with a trend channel forming over the last four. The stock touched the lower rail earlier this week and has since bounced a little. The daily stochastic readings were down in oversold territory and then made a bullish crossover and the pattern looks similar to what we saw in early October before the stock bounced.
Buy to open the January 265-strike calls on LRCX at $13.80 or better. These options expire on January 17. In order for these options to double the stock will need to reach $292.60. This price level is above the high from earlier this month, but the upper rail should be well above the $292 mark in the next week or so. I suggest a target gain of 100% with a stop at $262.00.
— Rick Pendergraft
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