Stocks bounced back on Monday after the massive selling last week. All four indices opened higher and they all closed higher, but it wasn’t smooth sailing for the Nasdaq. The index dropped in to negative territory in the middle of the day, but rallied late to finish with a gain of 0.42%.
The Russell gained 1.96% to lead the way and it was followed by the Dow which moved up 1.6%. The S&P tacked on 1.23% on the day.
Nine of the 10 sectors moved higher with only the communication services sector losing ground—it was only 0.05%, but it was still a loss.
The energy sector led the way with a gain of 3.41% and it was followed by the materials sector which gained 3.32%. Two other sectors gained over 2% and three others gained over 1.0%.
My scans returned another strong positive reading last night with 145 bullish signals and three bearish signals.
The barometer rose to 118.8 from 83.8 once these results were added in to the equation and that is the highest reading since March 17.
For the third straight day I have a bullish trade idea for you. Today’s subject company is Progressive (NYSE: PGR) and yes it was on the bullish list last night. The company’s fundamental ratings couldn’t get any better with an EPS rating of a 99 and an SMR rating of an A.
In addition to the great fundamental ratings, the stock has been trending higher within the confines of a trend channel. The upper rail connects the highs from April and October while the lower rail connects the lows from May, June, and July. The stock just hit the lower rail as the stochastic indicators hit their lowest level since May.
Buy to open the December 90-strike calls on PGR at $7.20 or better. These options expire on December 18, 2020. I suggest a target gain of 75% and that means the stock will need to reach $102.60. That target is slightly above the high in mid-October, but the upper rail will be well above that level in a few weeks. I recommend a stop at $89.00.
— Rick Pendergraft
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