Stocks opened higher on Wednesday and the indices all started and finished the day in positive territory. None of the four ever fell in to negative territory.
After struggling over the last few sessions, the Russell led the way yesterday with a gain of 1.05%. The other three indices experienced much smaller gains. The Dow moved up 0.24%, the Nasdaq tacked on 0.15%, and the S&P inched up 0.13%.
On the sector front, six of the 10 moved higher on the day and they were led by the energy sector with a gain of 1.59%. The materials sector gained 1.38% and those were the only two with gains over 1.0%.
The communication services sector fell 0.65% as the worst performer. The consumer staples sector dropped 0.12% as the second worst performer.
The scans produced 24 bullish signals and 24 bearish signals on Wednesday and that is the third time in the last few months the lists have been even.
The barometer moved up ever so slightly, rising to -6.4 from -9.9.
Even though there were a number of stocks to choose from on each list, there were only three that really got my attention as far as the whole setup. The one I liked the best was a bullish trade idea on Nucor Corp. (NYSE: NUE). The company’s fundamental indicators are average with an EPS rating of 57 and an SMR of a C, but the chart really stood out.
We see how the stock has been trending higher over the last nine months and a trend channel has formed over the last five months. The stock just hit the lower rail of the channel and it also found support at its 50-day moving average. The stochastic indicators hit their lowest level since the end of September before turning higher yesterday.
Buy to open the February 50-strike calls on NUE at $4.40 or better. These options expire on February 19, 2021. I suggest a target gain of 100% and that means the stock will need to reach $58.80. The stock peaked just over $57 in early December, but the upper rail should be well above our target in a week. I recommend a stop at $51.00.
— Rick Pendergraft
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