This Bullish General Mills (GIS) Stock Trade Targets a 100% Return by mid-March

Stocks bounced back on Monday after the losses experienced on Friday. All four of the main indices saw significant gains and they closed at their highs of the day.

The Nasdaq led the way with a gain of 1.13%, but it was the only one that gained more than 1.0%. The S&P gained 0.73% as the second best performer while the Russell tacked on 0.66%. The Dow notched a gain of 0.60% as the biggest laggard of the bunch.

Eight of the 10 main sectors gained ground on the day and they were led by the tech sector which gained 1.35%.

The consumer discretionary sector moved up 1.13% and that was the only other sector to gain more than 1.0%.

The energy sector dropped 0.50% and was the worst performer on Monday.

It was joined in the red by the materials sector which fell 0.05%.

My scans turned in a second straight negative result with 44 names on the bearish list and 13 names on the bullish side.

The barometer dropped in to negative territory thanks to the two negative totals from Friday and Monday. The final reading came in at -13.9, down from 5.6 on Friday.

Even though the barometer turned negative last night, the one trade setup that I liked the best from last night was a bullish one on General Mills (NYSE: GIS). The company scores a 74 on its EPS rating and a B on the SMR grading scale. Those readings are both above average.

The daily chart shows how the stock has been trending higher since the end of October and a trend channel has formed to define the different cycles. The stock just dropped below the lower rail and then rallied over the last few days to move back in to the channel. We also see that the daily stochastic indicators are in oversold territory and made a bullish crossover last night.

Buy to open the March 50-strike calls on GIS at $3.10 or better. These options expire on March 20. In order for these options to double the stock will need to reach $56.20. To reach our target the stock will need to reach a new 52-week high, but based on the last few moves after being oversold I think it can do that. I suggest a gain of 100% with a stop at $51.40.

— Rick Pendergraft

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Rick Pendergraft, Trades Of The Day

Rick Pendergraft has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick's analysis process includes fundamental, sentiment and technical analysis.