Stocks moved higher on Friday and the rally was fueled by promising results from Gilead Sciences (Nasdaq: GILD) vaccine for the COVID-19 virus. Three of the four indices were in the red in the early going, but all four rallied from there.
The Russell led the indices on Friday with a gain of 1.70% and it was followed by the Dow with a gain of 1.44%. The S&P moved up 1.05% and the Nasdaq posted a gain of 0.66%.
Eight of the 10 sectors moved higher, the opposite of what we saw on Thursday, with the healthcare sector losing 0.24% and the tech sector falling 0.03% as the only two that finished in the red.Two sectors stood above the rest with gains of over 3.0%.
The financial sector jumped 3.44% and the energy sector tacked on 3.19%.
None of the other sectors posted gains over 2.0%.
My scans flipped the script on Friday with 68 bullish signals and 21 bearish signals. That snapped a five-day streak of negative results.
The barometer jumped after these results were added in to the calculation, but it remained in negative territory. The final reading on Friday was -7.5, up from -43.1 on Thursday.
There were a handful of stocks on the bullish list that got my attention and there were a couple on the bearish list that looked like good trade ideas as well. The one that I liked the best was a bullish trade on STORE Capital (NYSE: STOR). The company gets great scores on the fundamental side with a 90 EPS rating and an A on the SMR grade.
The chart shows a trend channel forming off of the March low and the stock just above the lower rail at this time. There is a secondary layer of support in the same area via the 50-day moving average. We also see that the stochastic indicators just made a bullish crossover. The last few times we’ve seen the stock at the lower rail of the channel and a bullish crossover from the stochastics it has been a good sign for the stock.
Buy to open the August 20-strike calls on STOR at $3.10 or better. These options expire on August 21. I suggest a target gain of 100% for this trade and that means the stock will need to reach $26.20. The stock peaked at $26.80 in early June, so it won’t have to break that high to hit our target. I recommend a stop at $20.50.
— Rick Pendergraft