Friday saw stocks move higher yet again and it led to the best weekly gain since July for the S&P. All four indices opened higher and remained in positive territory throughout the day. A lot of the credit for the gains was given to ongoing hope that another round of fiscal stimulus can be reached in Congress.
The Nasdaq led the way with a gain of 1.39% and the S&P was second with a gain of 0.88%. The Dow moved up 0.57% and the Russell tacked on 0.55%.
Eight of the 10 sectors moved higher on the day with only the energy (-1.6%) and utilities (-0.02%) sectors moving lower.
The tech sector led the way with a gain of 1.53% and the consumer discretionary sector jumped 1.04% as the only other sector to gain over 1.0%.
My scans were far less active on Friday with only four bullish signals and 10 bearish signals.
The barometer rose a little with the small number of signals.
The final reading on Friday was -16.0, up from -22.5 on Thursday.
After a couple of bullish trade ideas in a row, I have a bearish idea for you today. The company is Trip.com Group (Nasdaq: TCOM) and of course it appeared on the bearish list on Friday. The company’s fundamental ratings are poor with an EPS rating of 7 and a D on the SMR grading scale.
While the stock got on my radar due to a daily signal, the weekly chart shows why I am bearish on it. We see that the stock has been trending lower for three years now and there is a trend line that connects the highs. The stock just hit that trend line this week and it is overbought. I expect it to make its next downward cycle over the next few months.
Buy to open the January 35-strike puts on TCOM at $4.60 or better. These options expire on January 15, 2021. I suggest a target gain of 100% for this trade and that means the stock will need to drop to $25.80. The stock saw some support in the $25 area several years ago and that level could act as support again, but our target is above that possible support. I suggest a stop at $35.00.
— Rick Pendergraft
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