For the third straight Monday we started the day with the announcement of a successful vaccine trial. This one came from the joint effort of AstraZeneca and Oxford. Once again the announcement had a positive impact on stocks and the indices all opened higher.
The Russell was the top performer with a gain of 1.85% and it was followed by the Dow which moved up 1.12%. The S&P gained 0.56% and the Nasdaq rallied from negative territory to finish with a gain of 0.22%.
Eight of the 10 sectors moved higher on Monday with two moving lower. The healthcare sector fell 0.25% and the tech sector dropped 0.02%.
The energy sector continued to experience the biggest moves and this time it was a gain of 7.09%. Three other sectors gained over 1% on the day – financials (+1.89%), industrials (1.68%), and consumer discretionary (+1.1.0%).
My scans turned positive last night with 14 bullish signals and nine bearish signals. This is the first positive reading since November 3.
The barometer moved a little higher, but remained solidly in negative territory. The final reading last night was -62.0, up from -99.0 on Friday.
With some bullish signals to work with, today’s trade idea is a bullish one. The company is CMS Energy (NYSE: CMS) and it scores well on the fundamental ratings. The EPS rating is an 82 and the SMR rating is a B.
We see on the chart how the stock has been trending higher for the last six months with a trend channel forming to define the various cycles within the overall upward trend. The stock just hit the lower rail of the channel and the daily stochastic indicators made a bullish crossover while in oversold territory.
Buy to open the January 60-strike calls on CMS at $3.20 or better. These options expire on January 15, 2021. I suggest a target gain of 100%. This means the stock will need to reach $66.40. The stock was up near $68 at the beginning of November so it won’t have to break that high to hit our target. I recommend a stop at $59.50.
— Rick Pendergraft
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