The four-day rally slowed on Friday as three of the four main indices lost ground while the Nasdaq stretched its winning streak to five days with a small gain of 0.04%. The October employment report was better than expected, but the ongoing election uncertainty seemed to take a toll on investor optimism.
The Russell took the biggest hit with a drop of 0.96%. The Dow fell 0.24% while the S&P lost 0.03%. Despite the small pullback on Friday, the S&P still gained over 7% on the week and that was the best week since April.
The sectors were evenly split on Friday with five moving higher and five moving lower. Of those moving higher, the consumer staples sector led the way with a gain of 0.46% and it was followed by the tech sector with a gain of 0.35%.
Energy stocks continued to be the most volatile group and the sector fell 2.16% on Friday. That was the worst sector performance of the bunch. The financial sector dropped 0.79% as the second worst performer.
My scans turned decidedly more negative on Friday with 33 bearish signals and four bullish signals.
The results from the last few days were enough to drop the barometer in to negative territory with a reading of -7.3. That snapped a streak of six straight days of positive readings.
After a couple of bearish trade ideas in the last two days, I have a bullish trade idea for you today. Even though there were only four stocks on the bullish list, there were a couple of stocks that I liked the setup on. The one the stood out the most was on Archer Daniels Midland (NYSE: ADM). The fundamental ratings are mixed with a great EPS rating of 88, but an average SMR rating of a C.
On the chart we see how ADM has been trending higher since the March low with a trend channel forming. The stock hit the lower rail of the channel six days ago and then bounced, but it hasn’t broken out just yet. It went through a similar phase in mid-May before it jumped sharply over a few weeks.
Buy to open the December 47-strike calls on ADM at $3.10 or better. These options expire on December 18, 2020. I suggest a target gain of 100% and that means the stock will need to reach $53.20. That is slightly above the price in October, but the upper rail should be well above that price in the next few weeks. I recommend a stop at $46.40.
— Rick Pendergraft
Legendary Stockpicker: "Buy this A.I. stock NOW" [sponsor]His award-winning system pinpointed NVDA and META before both stocks doubled. Now it's flashing "BUY" on this under-the-radar A.I. stock. MORE HERE...