Stocks rallied sharply again on Tuesday as Americans headed to the polls on the final day of voting. All four indices opened higher and rose even higher in the early going. From the mid-morning on the gains remained pretty constant.
The Russell led the way with a gain of 2.91% and the Dow gained 2.06% as the second best performer. The Nasdaq moved up 1.85% and the S&P tacked on 1.78%.
Nine of the 10 sectors moved higher on the day. The only sector that lost ground was the energy sector which lost 0.57%.
All of the sectors that gained ground gained at least 1.0% and three gained over 2.0%. The industrial sector gained 2.95% to lead the way. The financial sector jumped 2.22% and the consumer discretionary sector moved up 2.2%.
My scans were skewed to the bullish side once again, but the size of the bullish list was considerably smaller. There were 46 bullish signals and only one bearish signal.
The barometer dropped a little as the weighting of the last few days starts to drop. The final reading last night was 100.7, down from 118.8.
Once again there were a number of stocks to choose from on the bullish list, but I chose on that had great fundamentals. Etsy (Nasdaq: ETSY) scores a 99 on the EPS rating scale and it gets an A on the SMR grading scale.
We see on the chart how the stock has rallied so sharply from its March low. The stock hit a low around $30 and would move to a high above $150. Since May the stock has seen a trend line form that connects the lows from May and September and the stock just hit that trend line and bounced. The stochastic indicators hit oversold territory last week and that was only the third time in the last nine months they have been so low.
Buy to open the December 125-strike calls on ETSY at $14.50 or better. These options expire on December 18, 2020. I suggest a target gain of 100% for this trade and that means the stock will need to reach $154.00. That target is slightly below the high from October so the stock won’t have to break to a new high. I recommend a stop at $119.00.
— Rick Pendergraft
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