The indices got off to a good start in December as all four gained ground on Tuesday. There was a little bit of disparity between the performances with the Nasdaq leading the way with a gain of 1.28% while the S&P moved up 1.13%.
The Russell jumped 0.89% and the Dow lagged the other three, but still notched a gain of 0.63%.
Nine of the 10 main sectors moved higher on the day with the industrial sector being the lone group to lose ground with a decline o f0.25%.
For the first time in a number of days the energy sector wasn’t the leader or the biggest loser. The communication services sector led the way with a gain of 1.83% and it was followed by the financial sector with a gain of 1.54%. The tech sector tacked on 1.28% to give us three sectors with gains over 1.0%.
My scans remained negatively skewed with seven bullish signals and 51 bearish signals.
The barometer rose slightly thanks to the smaller discrepancy between the two lists. The final reading for Tuesday was -73.1, up from -80.4.
Even though there were far more bearish signals again last night, the trade setup that stood out the most was from the bullish list. Centene (NYSE: CNC) is a managed healthcare company and it scores extremely well in the fundamental ratings. The EPS rating is a 99 and the SMR rating is an A. Those are the highest ratings a company can get.
Since hitting a short term low in late September, the stock has been trending higher with some pretty big swings in the process. We see how the lows from September and October connect with the recent low to form an upwardly sloped trend line. I look for the stock to make its next upward move in the next few weeks and if it’s similar to the moves we saw off those lows, it should jump over 20%.
Buy to open the January 60-strike calls on CNC at $5.65 or better. These options expire on January 15, 2021. I suggest a target gain of 100% and that means the stock will need to reach $71.30. The stock peaked over $72.00 in early November, so it won’t have to break that high to hit our goal. I suggest a stop at $61.00.
— Rick Pendergraft
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