After snapping the winning streak on Tuesday, stocks soared higher on Wednesday as Gilead Sciences reported promising results for a drug that targets the COVID-19 virus. The Fed announced that they expected rates to remain where they are, near zero, for the foreseeable future.
All four of the main indices saw big gains, but the Russell really jumped with a move of 4.83%. The small-cap index has jumped 13.67% in the last week and is on a six-day winning streak.
The Nasdaq gained 3.57% on the day to finish as the second best performer of the four.The S&P tacked on 2.66% and the Dow notched a gain of 2.21%.
Eight of the 10 main sectors moved higher on Wednesday.
The energy sector was far and away the biggest mover with a gain of 7.41%.
The communication services sector jumped 4.84% and tech stocks moved up 4.1% for third place.
The only two sectors that lost ground on the day were utilities and consumer staples with losses of 0.91% and 0.42%, respectively.
My scans turned more bearish despite the big rally. There were 41 bearish signals generated and nine bullish signals.
The barometer fell to -17.2 from -6.5 after these results were added in to the equation.
Of the nine stocks on the bullish list, there was one that looked decent on the chart, but its fundamentals were terrible. That led me to another bearish trade idea and this one is on DISH Network (Nasdaq: DISH). The stock appeared on the bearish list and the EPS rating is a 56 while the SMR rating is a C.
Like most stocks, DISH has rallied nicely off its March low, but it now faces some resistance at its 50-day moving average. The RSI is close to overbought territory and the stochastic indicators are in overbought territory. The stochastic readings did make a bearish crossover last night.
Buy to open the June 30-strike puts on DISH at $5.50 or better. These options expire on June 19. I suggest a target gain of 75%. In order to reach our target the stock will need to reach $20.40. This is right where the stock bottomed in mid-April. I suggest a stop at $27.00.
— Rick Pendergraft
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