Stocks roared back on Monday with the Dow setting a record for the biggest one-day point gain in history. Most stocks and equity ETFs reached oversold levels on their daily charts last week and that likely played a hand in the sharp jump on Monday.
The Dow posted a gain of 5.09% and that was the top performance on the day. The S&P jumped 4.6% and the Nasdaq moved up 4.49%. The Russell lagged the other three by a considerable amount, but still posted a gain of 2.85%.
All 10 main sectors moved higher on the day with four sectors gaining over 5%.The utilities sector led the way with a gain of 5.89%.
The tech sector gained 5.78%, consumer staples rallied by 5.35%, and the financial sector tacked on 5.11%.
Believe it or not, the smallest gain on the day was the consumer discretionary sector which moved up 3.44%.
My scans produced yet another incredibly high number of bullish signals with 179 names on that side of the tally and not a single stock on the bearish side.
The barometer jumped to its highest reading ever with a reading of 198.9.
Obviously there were numerous stocks to choose from last night, but the one that jumped out at me most was American Express (NYSE: AXP). The company scores an 83 on the EPS rating scale and an A in the SMR grading system. The stock was already on my radar from looking through weekly charts, and then it appeared on the daily bullish scan.
Two things that jumped out to me on the weekly chart were the position of the stock compared to its 104-week moving average and the RSI. The 10-week RSI dropped below the 40 level last week and this is the first time the indicator has been this low since December 2018. The last time the stock flirted with its 104-week was back in December 2018 as well. The stock briefly dipped below the trend line and then went on a bullish run for the next few months.
Buy to open the April 110-strike calls on AXP at $8.20 or better. These options expire on April 17. In order for these options to double the stock will need to reach $126.40. The stock was up above $138 in January and February, so it won’t have to break to a new high to reach our target. I suggest a target gain of 100% with a stop at $106.50.
— Rick Pendergraft