This Raytheon (RTX) Trade Targets a 100% Return in About Seven Weeks

After a slow start on Monday, stocks rallied in the morning session and we ended up with significant gains for all four of the major indices. The Russell led the way with a gain of 3.08% and it was followed by the Dow with a gain of 2.32%. Boeing helped push the Dow higher with a 14% gain of its own.

The S&P jumped 1.47% and the Nasdaq tacked on 1.2% on the day.

All 10 main sectors moved higher with only the healthcare sector (+0.90%) failing to gain at least 1.0%.

The financial sector experienced the second smallest gain at 1.11%.

The top performing sector was industrials with a jump of 3.28% and it was also the beneficiary of Boeing’s move.

The materials sector gained 1.89% as the second leading performer.

My scans turned significantly more bullish on Monday with 190 bullish signals and only two bearish signals.

The barometer jumped from -0.6 to 76.7 once these results were added in to the equation. That’s the highest reading for the indicator since March 25.

There were an abundance of stocks and ETFs to choose from last night, but the one stock that I liked the best was Raytheon Technologies (NYSE: RTX). Obviously it was on the bullish list and the company’s fundamental scores are good with an EPS rating of 64 and an SMR rating of an A.

We see how a trend channel has formed off of the low in March and the stock just hit the lower rail of the channel. The stochastic indicators are in oversold territory and just made a bullish crossover. A similar pattern occurred in May and that was just before the stock rallied over 45% from May 14 through June 8.

Buy to open the August 60-strike calls on RTX at $5.65 or better. These options expire on August 21. I suggest a target gain of 100% and that means the stock needs to reach $71.30. The stock peaked just shy of $75 earlier this month. I recommend a stop at $58.75.

— Rick Pendergraft

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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.