Stocks bounced back from Wednesday’s selling with strong gains on Thursday. Three of the four main indices moved higher and were in positive territory all day. The Russell dropped 0.10% after waffling back and forth all day.
The Dow rallied by 0.99% to lead the way and the S&P was right behind it with a gain of 0.98%. The Nasdaq sold off a little heading in to the close, but it still managed to gain 0.50%.
All 10 sectors moved higher on the day and six of them gained over 1.0%. The financial sector led the way with a gain of 1.86% with the materials sector finishing with the second best gain at 1.72%.
The consumer discretionary sector experienced the smallest gain at 0.31%. The communication services sector gained 0.35% and that was the second smallest gain.
My scans turned positive last night, snapping a string of five straight negative results. There were 50 bullish signals and 22 bearish signals.
The barometer jumped from -39.8 to -12.8 once these results were added in to the calculation.
Today’s trade idea is a bullish one and it is on a member of the industrial sector. Ingersoll Rand (NYSE: IR) appeared on the bullish list last night and the company’s fundamental ratings are pretty solid. The EPS rating is a 70 and the SMR rating is an A.
An upwardly sloped trend channel has developed on the daily chart over the last seven months and the stock just hit the lower rail of the channel. The daily stochastic indicators and the 10-day RSI were both in oversold territory, but both turned higher yesterday. The last time both indicators were oversold was last March—just before the stock doubled in less than three months.
Buy to open the March 40-strike calls on IR at $4.40 or better. These options expire on March 19, 2021. I suggest a target gain of 100% and that means the stock will need to reach $48.80. The stock peaked at $47.78 earlier this month, so it will need to break through that potential resistance to hit our target. I recommend a stop at $39.75.
— Rick Pendergraft
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