Wednesday saw the Biden Presidency start with gains across the board for the indices. All four opened higher and remained in positive territory throughout the day. The three main indices all closed near their highs of the day.
The Nasdaq jumped 1.97% to lead the way and it was followed by the S&P which gained 1.39%. The Dow moved up 0.83% and the Russell tacked on 0.44%.
Nine of the 10 sectors gained ground on the day with only the financial sector losing ground. The sector fell 0.44% as companies continued to report earnings.
Of the nine sectors that moved higher, three really stood out. The communication services sector jumped 3.14% which made me happy since that was the subject of yesterday’s trade idea. The tech sector rallied for a gain of 1.95% and the consumer discretionary sector moved up 1.9%. Those were the only three sectors that gained more than 1.0%.
My scans turned positive last night after seven straight negatively skewed results. There were 34 bullish signals and 32 bearish signals.
The barometer continued to climb and rose to -21.6 last night. Tuesday night’s reading was -40.6.
Today’s trade idea is another bullish one on a big tech name that everyone knows. Apple (Nasdaq: AAPL) appeared on the bullish list last night and the company’s fundamental ratings are strong with an EPS rating of 80 and an A SMR rating. The company is set to report earnings a week from today, so you will want to be aware of that.
There were two things that stood out to me on the chart. First, the short-term trend line that connects the lows since the end of October looks like it is acting as support. The second that jumped out was the strong moves when the stochastic indicators have been below 50 and made a bullish crossover. The only four we see, prior to last night, were followed by gains of at least 20% over the next month or so.
Buy to open the March 130-strike calls on AAPL at $9.20 or better. These options expire on March 19, 2021. I suggest a target gain of 100% which means the stock will need to reach $148.40. The stock will need to hit a new high to reach our target, but based on previous bullish crossovers the target is easily within reach. I recommend a stop at $126.50.
— Rick Pendergraft
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