Stocks rallied sharply on Friday even after the April employment report showed that 20.5 million jobs were lost during the month. The unemployment rate spiked to 14.7% and that was better than the forecast.
The Russell jumped 3.64% on Friday and the Dow was the second best performer with a gain of 1.91%. The S&P moved up 1.69% while the Nasdaq tacked on 1.58%.
The industrial sector turned in the second best performance at +2.48%.
Six of the sectors gained over 2.0%.
The healthcare sector was the only sector that failed to gain at least 1.0% with a gain of 0.52%.
The second smallest gain was from the tech sector at 1.47%.
My scans continued their trek higher with 73 bullish signals and 11 bearish signals. The net positive reading of 62 is the highest since the end of March as the bounce was just getting started.
The barometer jumped to 44 from 26 once these results were added in to the equation.
Today’s trade idea is another bullish one and it is on Verizon Communications (NYSE: VZ). The stock appeared on the bullish list and the fundamental ratings are well above average with an EPS rating of 69 and an SMR rating of a B.
We see on the daily chart that the stock moved through its 50-day moving average in early April only to pull back down to the trend line over the last couple of weeks. The trend line acted as support last week and the stock bounced higher on Friday. We see that the stochastic indicators were in oversold territory and made a bullish crossover on Friday.
Buy to open the July 55-strike calls on VZ at $3.30 or better. These options expire on July 17. I suggest a target gain of 75% for this trade which means the stock will need to reach $60.80. The stock was up to $61 back in December, so it won’t have to hit a new 52-week high to reach our target. I suggest a stop at $55.20.
— Rick Pendergraft
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