Stocks jumped out of the gate on Thursday and remained higher throughout the day. All four of the main indices finished with gains and none of them touched negative territory at any point.
The Nasdaq saw the biggest jump at 2.52% and it was followed by the Russell with a gain of 2.31%. The S&P gained 1.04% and the Dow moved up 0.58%.
As for the sector performances, seven of the 10 moved higher while three moved lower. The tech sector led the way with a gain of 2.17% and it was followed by the communication services sector (+1.89%) and the consumer discretionary sector (+1.53%).
All three of the sectors that lost ground didn’t drop all that much. The financial sector fell 0.29%, the utilities sector dropped 0.26%, and the consumer staples sector lost 0.23%.
My scans were negative again on Thursday with 49 bearish signals and 18 bullish signals. Once again the bullish scan was littered with bond ETFs, this time there were 10 on the list.
The barometer dropped sharply once again, this time falling from 34.6 to 7.1.
Staying with a pattern of a bullish trade idea followed by a bearish trade idea, today’s idea is a bullish one. Stoneco (Nasdaq: STNE) appeared on the bullish list and it has pretty good fundamental ratings. The EPS rating is a 73 and the SMR rating is an A.
We see how the low closing prices over the last eight months all connect nicely to form a trendline. The stock hit that line earlier this week and has now bounced. It is also worth noting that this week’s low is in close proximity to the low from late January. This could be a double-bottom pattern or it could be a possible head-and-shoulders pattern. Either of these patterns would call for the stock to rise from here, but the H&S pattern would mean the stock would peak around the December high and then turn lower.
Buy to open the April 72.50-strike calls on STNE at $7.40 or better. These options expire on April 16, 2021. I suggest a target gain of 75% and that means the stock will need to reach $87.90. The stock peaked just above that level in December and then exceeded it in February. I recommend a stop at $70.50.
— Rick Pendergraft
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