This Trade Could Double Your Money in Seven Weeks

Stocks roared higher on Tuesday as the promise of a stimulus package from Congress gave investors confidence. All four major indices saw huge jumps and the Dow had its best day since 1933 with a gain of 11.37%.

The Russell finished with the second best gain at 9.39% and the S&P was close behind with a gain of 9.38%. The Nasdaq lagged with, I can’t believe I’m saying this, a gain of 8.12%.

All 10 main sectors experienced huge jumps on the day and six of them saw double-digit percentage gains.

The energy sector saw the biggest jump at 16.04%.

The industrial sector shot up 12.65% and the financials gained 12.4% as the second and third best performers.

The consumer staples sector gained 5.1% and that was the smallest gain on the day.

The communication services sector tacked on 6.15% and that was the second smallest gain.

My scans turned decidedly more positive with 167 bullish signals and only one bearish signal.

The barometer jumped from 20.7 to 78.4 once these results were added in to the equation.

With so many stocks to choose from, it was difficult to find just one for today’s trade idea, because there were a number of bullish setups that I liked. Even with that, there was one that stood out and that was SolarEdge Technologies (Nasdaq: SEDG). The company scores a 99 on the EPS rating scale and it gets an A in the SMR category.

Like we saw with ASML on Tuesday, SolarEdge was on a list of stocks I have been tracking as a possible stock investment. The reason the stock stood out, besides the strong fundamental ratings, was due to the weekly chart. We see how the stock hit resistance around the $71 area in May ’18. The stock eventually broke through that price point in August 2019 and then pulled back a little. The $71 area acted as support in September. Now it looks like the stock is finding support in the area once again.

Buy to open the May 80-strike calls on SEDG at $16.80 or better. These options expire on May 15. With the volatile market and the high option premiums, I suggest a target gain of 50%. This would mean a price of $25.20 for the options and a target of $105.20 for the stock. I suggest a stop at $71.

— 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.