Monday stocks get whipped around a little, but at the end of the day all four indices finished higher. They opened mixed and all turned lower just before Noon, but then turned it around.
The Nasdaq led the way with a gain of 1.05% and it was followed by the S&P with a gain of 0.65%. The Dow moved up 0.53% and the Russell squeaked out a gain of 0.18%.
Eight of the 10 sectors moved higher on the day and it was an odd trio of sectors that led the way. The consumer discretionary sector jumped 1.34%, the utilities sector rallied 1.3%, and the tech sector tacked on 1.06%.
The energy sector dropped 1.25% and the financial sector fell 0.52% as the only two that lost ground on the day.
My scans turned in another bearish result on Monday with 53 bearish signals and three bullish signals.
The barometer dropped to -34.3 from -12.4 once these results were added in to the equation.
Believe it or not, despite the fact there were only three bullish signals, I liked two bullish setups and two bearish setups. Of those four, the one I liked best was on BHP Billiton (NYSE: BBL). The stock appeared on the bullish list and it has great fundamental ratings. The EPS rating is 90 and the SMR rating is an A.
We see that a trend channel has formed over the last three months and the stock just hit the lower rail of that channel. The stock has additional support from its 50-day moving average and the stochastic indicators made a bullish crossover last night. The rallies off of the low in November and January produced gains of over 20% and 30%. I am looking for another move of that magnitude and that would mean the stock moves above $70.
Buy to open the June 55-strike calls on BBL at $7.30 or better. These options expire on June 18, 2021. I suggest a target gain of 100% and that means the stock will need to climb to $69.60. The target is above the high in February, but the upper rail will be up in that area in a few weeks. I recommend a stop at $57.00.
— Rick Pendergraft
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