Stocks ended their two-day losing streak with an interesting turn in momentum. All four indices opened lower and three of the four were down over 1.0%. All four reversed the losses and finished with gains on the day.
The Nasdaq was the lone index that wasn’t down over 1.0% and it was the first one to turn positive. The tech-heavy index finished with a gain of 1.23% and that was far and away the top gain of the day.
The S&P moved up 0.42% by the end of the day and the Russell squeaked out a gain of 0.28%. The Dow eked out a gain of 0.11%.
The sectors were split in their performances with six moving higher and four moving lower.The energy sector was the top performer with a gain of 3.46%.
The tech sector jumped 1.33% as the second best performer.
The industrial sector was the worst performer with a loss of 1.27%.
Airlines stocks were a big reason for the decline as Warren Buffet announced over the weekend that Berkshire Hathaway had sold all of its positions in the industry.
The financial sector was the second worst performer with a drop of 0.91%.
My scans dropped considerably in terms of the number of bearish signals that were produced. There were 16 stocks on the bearish list for Monday and only three bullish signals.
The barometer rose once these results were added in to the equation. The final reading last night was -70.3 after a reading of -95.8 on Friday.
The bearish list was interesting last night as there were far more positive fundamental indicators than negative ones. This led me to a bullish trade idea for today and the company is Vertex Pharmaceuticals (Nasdaq: VRTX). The company’s fundamental ratings are really strong with an EPS rating of 99 and an SMR rating of an A.
The thing that jumped out at me the most on the chart was how the $250 area has acted as support in the last few days. The stock saw this same price level act as resistance back in February and now the former resistance has turned in to support. We also see that the stochastic indicators made a bullish crossover yesterday.
Buy to open the June 260-strike calls on VRTX at $17.00 or better. These options expire on June 19. I suggest a target gain of 75% for this trade. In order to reach this target, the stock will need to reach $290. That will mean reaching a new high, but it is only 9.5% from the current price. I suggest a stop at $250.
— Rick Pendergraft
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