Stocks resumed their broad-based rally on Thursday and all four indices saw solid gains as a result. The Nasdaq led the way with a gain of 0.67%. The Dow and S&P were close for the second best result with gains of 0.49% and 0.45%, respectively. The Russell lagged the other three but still managed to move up 0.32%.
Eight of the 10 main sectors moved higher on the day with the communication services sector jumping 0.92% to lead the way. The tech sector was the second best performer with a gain of 0.72%.
[hana-code-insert name=’adsense-article’ /]The energy sector and the financial sector tied for the worst performance with identical losses of 0.03%.They were the only two sectors that lost ground on the day.
The scans remained bearishly skewed with 32 names on the bearish list and nine names on the bullish list.
There are far more stocks in overbought territory than there are in oversold territory so I don’t look for the scans to turn positive anytime soon.
The barometer changed little with the final reading coming in at -24.5 after a reading of -26 on Wednesday.
Of the 41 names on the two lists, there weren’t a great number that stood out for the whole picture—the fundamentals, the chart, and the risk/reward relationship. The one chart that stood out the most was Waste Management (NYSE: WM) and it was on the bearish list. The company’s fundamentals are actually pretty good, but it is the chart that got my attention. The EPS rating is an 81 and the SMR rating is a B.
The stock has been trending lower since peaking in early September. A downward sloped trend channel has defined the different cycles and the stock is at the upper rail currently. Neither the RSI nor the stochastic readings are in overbought territory, but the RSI was above 60 and that is approximately where it was in September and October before big drops.
Buy to open the January 115-strike puts on WM at $3.30 or better. These options expire on January 31. In order for these options to double the stock will need to fall to $108.40. The stock fell below the $108 level back in early November so it won’t have to break to a new low. I suggest a target gain of 100% with a stop at $114.00.
— Rick Pendergraft
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