Stocks opened lower on Monday with all four indices starting out in the red. By mid-day all four had moved in to positive territory, but only two of the four were able to stay on the plus side of the ledger.
The Nasdaq gained 0.78% on the day while the S&P eked out a gain of 0.01%. The Russell fell 0.63% as the worst performer and the Dow dropped 0.45% as the other index in the red.
The sector performances weren’t nearly as balanced with seven moving lower and only three moving higher.The healthcare sector jumped 1.72% as the leading performer and it was joined in positive territory by tech (+0.66%) and communication services (+0.06%).
On the downside, there were four sectors that finished with a loss greater than 1.0%.
The financial sector lost 1.97% as the worst of the bunch and it was followed by the energy sector with a decline of 1.75%.
My scans turned negative on Monday, but just barely. There were 20 bearish signals and 18 bullish signals.
The barometer dropped from 44.0 to 28.9 once these results were added in to the equation.
Even though there were 38 signals between the two sides, there were only a few that I considered for today’s trade idea. I liked the setup for Alexion Pharmaceuticals (Nasdaq: ALXN) the best and it was on the bullish list. The company scores a 96 on the EPS rating scale and an A on the SMR grading system.
The stock peaked just shy of $112 a few weeks ago and then pulled back for a week and a half. The stock appears to have formed a bottom and yesterday the stock turned significantly higher. The stochastic readings were in oversold territory and made a bullish crossover last night.
Buy to open the June 95-strike calls on ALXN at $9.20 or better. These options expire on June 19. I suggest a target gain of 75% which means the stock will need to reach $111.10. That is below the high in April, so it won’t have to break to a new temporary high. I suggest a stop at $96.00.
— Rick Pendergraft