Stocks continued to rally on Friday and almost erased the losses from the first part of the week, but three of the four main indices closed with weekly losses. The Russell managed to log a small weekly gain.
The Nasdaq led the way on Friday with a gain of 1.65% and it was followed closely by the Russell which moved up 1.56% on the day. The S&P tacked on 1.39% and the Dow notched a gain of 1.11%.
All 10 of the main sectors moved higher on Friday with seven of them gaining more than 1.0%.The tech sector led the way with a gain of 2.12% and it was the only one to move up over 2.0%.
The consumer discretionary sector gained 1.69% as the second best performer.
The energy sector registered the smallest gain at 0.23%, but it was the top performing sector on the week.
The utilities sector tacked on 0.62% and that was the second smallest gain.
My scans turned in their first positive result in 11 trading days with 14 bullish signals and five bearish signals.
The barometer continued to climb toward positive territory and finished with a reading of -11.3 after coming in at -27.5 on Thursday.
With the benefit of having more bullish signals than bearish signals, I have a bullish trade idea for you today. This is only the second bullish trade idea out of the last 12. The subject of today’s trade is Principal Financial Group (Nasdaq: PFG). The company scores a 70 on the EPS rating system and it gets a B on the SMR grading system.
We see on the chart how the stock has put in a series of higher lows over the past month and that has created a trend line. The stock hit the trend line on Friday and it looks like it is ready to bounce again. There is potential resistance at the $35 level so we will want to keep an eye on that area.
Buy to open the June 25-strike calls on PFG at $6.60 or better. These options expire on June 19. I suggest a target gain of 50% for this trade as that means it won’t have to break above the $35 level to hit our target. I suggest a stop at $28.00.
— Rick Pendergraft