This Bullish Trade Could Double Your Money in One Month

Thursday was an interesting day for stocks as the indices opened sharply lower and reversed course in the morning session. All four were down significantly and by mid-day two had turned positive. By the end of the day all four had moved in to positive territory.

The Dow led the way with a gain of 1.62% and it was followed by the S&P with a move of 1.15%. The Nasdaq and the Russell didn’t move into positive territory until late in the day, but they finished with gains of 0.91% and 0.35%, respectively.

Nine of the 10 sectors moved higher on Thursday.

The only one that finished with a loss was the consumer staples sector and it only lost 0.25%.

All the other sectors gained at least 1.0% on the day.

The financial sector was the top performer with a jump of 2.57%.

The consumer discretionary sector tacked on 1.54% as the second best performer.

The other seven sectors were all pretty close together with gains between 1.01% and 1.27%.

My scans remained negative last night with 14 bearish signals and eight bullish signals.

The barometer inched up a little, moving from -45.6 to -38.6.

Today’s trade idea is a bullish one and the company is Discovery (Nasdaq: DISCA). The cable operator and online video content provider was on the bullish list last night and the company scores very well in the fundamental ratings. The EPS rating is an 86 and the SMR rating is an A.

On the chart we see that the stock formed a bullish engulfing pattern on Thursday with the entire body from the day engulfing the body from Wednesday. Obviously this is a bullish pattern and we also see that the daily stochastic indicators made a bullish crossover as well. The indicators are in oversold territory.

Buy to open the July 20-strike calls on DISCA at $2.05 or better. These options expire on July 17. I suggest a target gain of 100% on this trade and that means the stock will need to reach $24.10. The stock peaked at $25.05 in April, so it won’t have to break that high to hit our target. I suggest a stop at $18.75.

— Rick Pendergraft

This has never returned less than 400% over 4 years [sponsor]
Something big is happening in America… and almost no one is paying attention. A completely misunderstood asset is transforming our world--and making people rich (Barron's estimates at least 20,000 people). A multimillionaire has written a fascinating analysis, and posted it free on his website here...

Rick Pendergraft, Trades Of The Day

Rick Pendergraft has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick's analysis process includes fundamental, sentiment and technical analysis.