Even though the initial jobless claims nearly doubled from last week’s record reading, investors brushed off the news and pushed stocks higher. All four of the main indices moved higher on the day, but they did waffle a little throughout the day.
The S&P led the way on Thursday with a gain of 2.28% and the Dow was close behind with a move of 2.24%. The Nasdaq moved up 1.72% and the Russell brought up the rear with a gain of 1.29%.
All 10 main sectors moved higher on the day, but the energy sector was far and away the top performer.Oil prices jumped dramatically after President Trump announced that there were talks between Saudi Arabia and Russia on production cuts.
The energy sector ended up jumping 9.16% while oil itself jumped nearly 22%.
It was the biggest one-day percentage gain for oil ever.
The utilities sector jumped 3.13% as the second best performer and the healthcare sector gained 2.77% as the third best performer.
The consumer discretionary sector experienced the smallest gain at 0.37%.
My scans remained negative on Thursday, but the gap between the two lists wasn’t nearly as great as it had been in the previous few days. There were 19 bearish signals and four bullish signals.
The barometer moved up slightly, but remained solidly in negative territory. Thursday’s final reading was -35.5, up from -40.9 on Wednesday.
The subject of today’s trade idea has been the subject of two other trade ideas over the past year and both were bearish ideas. Steel Dynamics (Nasdaq: STLD) appeared on the bearish list last night and it has average fundamental ratings with an EPS rating of 51 and an SMR rating of a C. Of those two previous trade ideas on the company, one was successful and one wasn’t.
Steel Dynamics gapped lower back on March 9 before falling all the way down to $14.80. The stock rallied back up to the $23 area earlier this week, but it failed to move back above that level. When the stock gapped lower in early March, it gapped down to the $23 area from $24.64 the previous day.
Buy to open the May 23-strike puts on STLD at $3.40 or better. These options expire on May 15. For these options to double, the stock will need to drop to $16.20. As I mentioned before, the stock dropped down below $15 in March. I suggest a target gain of 100% with a stop at $23.05.
— Rick Pendergraft
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