Stocks rallied on Monday with all four indices moving higher on the day. None of the four ever entered negative territory as they opened higher and remained in positive territory throughout the day.
The Dow led the way with a gain of 1.35%. The Russell jumped 1.03% and the S&P gained 1.00% to give us three of the four with gains of at least 1.0%. The Nasdaq lagged the other three, but still posted a gain of 0.60%.
Nine of the 10 main sectors moved higher on the day with the healthcare sector losing 0.46% as the only one to finish in the red.The energy sector finally turned things around on Monday and after being the worst performing sector for four straight days, it led the way with a gain of 2.75%.
The financial sector jumped 2.39% and was the second best performer. There were four other sectors that gained over 1.0%.
My scans turned positive last night with 42 bullish signals and nine bearish signals.
I developed and started tracking my barometer at the beginning of 2009 and for only the second time in the last 11 and a half years, the indicator came in with a reading of 0.0—a completely neutral reading. That was up from a reading of -23.5 on Friday.
I have a second straight bullish trade idea to offset the three bearish trade ideas at the end of last week. Fidelity National Financial (NYSE: FNF) was on the bullish list last night and its fundamental ratings are strong. The EPS rating is a 94 and the SMR rating is an A.
The chart shows how the lows from March and May connect to form an upwardly sloped trend line and the stock just hit last week before turning higher in the last few days. The daily stochastic indicators were in oversold territory and made a bullish crossover last night. The scenario was similar in May and at that point the stock rallied over 50% in less than a month.
Buy to open the October 31-strike calls on FNF at $3.20 or better. These options expire on October 16. I suggest a target gain of 75% and the stock will need to reach $36.60 to reach that target. The stock peaked at $36.59 on August 11. I recommend a stop at $31.40.
— Rick Pendergraft
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