After initial jobless claims came in worse than expected, stocks came under some selling pressure at the open. Stocks rallied off their lows and two of the four sectors would finish in the black for the day.
The Russell led the way with a gain of 1.08% and the Nasdaq joined it in positive territory with a move of 0.54%.
The Dow was the only one of the indices that never made it in to positive territory and it finished with a loss of 0.23%. The S&P fell 0.13%, but it was in positive territory briefly around midday.
The sectors were split on the day with six moving lower and four moving higher. The industrial sector took the worst loss at 0.95% and materials were down 0.61% as the second worst performer.
The energy sector led the way on Thursday with a jump of 3.07%. After that the gains were considerably smaller and the second best performer was the financial sector with a gain of only 0.17%.
My scans turned in another negative result last night, but the difference between the two lists wasn’t as bad. There were 36 bearish signals and eight bullish signals.
The barometer moved up a little, but remained solidly in negative territory. The final reading for Thursday was -74.4, up from -88.0 on Wednesday.
Despite the greater number of bearish signals, there was a stock on the bullish list that stood out to me the most. Deere & Co. (NYSE: DE) scores an 84 on the EPS rating scale, but it only ranks a C on the SMR grading system.
We see on the daily chart how the stock has been moving higher within a trend channel over the last seven months. The stock is just above the lower rail at this time and it is in oversold territory. The daily stochastic indicators made a bullish crossover last night. Each of the last three times the indicators have made a bullish crossover, the stock has rallied sharply.
Buy to open the January 15-strike calls on DE at $11.10 or better. These options expire on January 15, 2021. I suggest a target gain of 75% and that means the stock will need to move up to $269.43. That is above the high from November, but it’s only 6.3% from where the stock closed last night. I recommend a stop at $247.00.
— Rick Pendergraft