After some selling hit the markets on Friday, stocks bounced back on Monday. They got a boost after reports that the U.S. would remove China’s designation as a currency manipulator.
All four of the main indices moved higher on the day with the Nasdaq leading the way again. The tech-laden index jumped 1.04%. The Russell notched a gain of 0.72% while the S&P moved up 0.70%. The Dow lagged the other three indices, but still managed to move up 0.29%.
Nine of the 10 sectors moved higher on Monday with the healthcare sector dropping 0.35% as the only sector in the red.The tech sector led the way with a gain of 1.34% and the materials sector moved up 1.29%.
These were the only two sectors to notch gains over 1.0%.
My scans turned in their second bullishly skewed result in the last three trading days on Monday.
There were 26 names on the bullish list and 12 names on the bearish list.
The barometer moved higher once these results were added in to the equation and for the first time since December 9, the barometer recorded a positive number. The final reading was 5.6, up from the -4.3 reading on Friday.
For the third straight day I have a bullish trade idea for you today. This time the company is Wendy’s (NYSE: WEN). The stock appeared on the bullish list and the company’s fundamental ratings are really good. The EPS rating is a 92 and the SMR rating is an A.
We see on the chart how the stock has been moving higher within a trend channel over the last four months. The first point on the rail comes from the low after the stock gapped lower. A recent small pullback brought the stock back down to the lower rail. The daily stochastic readings are in oversold territory and made a bullish crossover last night.
Buy to open the February 20-strike calls on WEN at $1.65 or better. These options expire on February 21. In order for these options to double the stock will need to reach $23.30. The stock has rallied 10% or more when it hit the lows that formed the lower rail. Another 10% rally from the low yesterday would put the stock near the $23.30 level. I suggest a target gain of 100% with a stop at $20.80.
— Rick Pendergraft
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