Thursday saw all four indices register significant gains with the Dow being the only one that failed to gain at least 1.o%. This occurred before the March employment report was released on Friday morning and saw 916K jobs added during the month. The results blew past the consensus estimate and futures were up around 0.5% in the hours after the release.
As for Thursday’s results, the Nasdaq led the way with a gain of 1.76% and the Russell jumped 1.5%. The S&P eclipsed the 4,000 mark for the first time in history and finished with a gain of 1.18%. The Dow gained 0.52%
Seven of the 10 main sectors moved higher on the day and two posted gains over 2.0%. The energy sector led the way with a gain of 2.55% and the tech sector rallied by 2.01%.
The consumer staples sector was the worst performer with a decline of 0.48% and the healthcare sector dropped 0.30%. The healthcare sector fell a more modest 0.09%.
My scans remained positive on Thursday with 51 bullish signals and 18 bearish signals. That stretched the streak of bullish readings to eight days.
The barometer fell slightly after the results from Thursday were added in to the equation. The final reading was 28.2, down from 32.8.
There were a number of stocks on the bullish list with good fundamental ratings and there were some on the bearish list with poor fundamentals, but the charts and the fundamentals didn’t seem to line up on any of them. In the end, I chose the technicals over the fundamentals and decided on a bullish trade on Cameco Corp. (NYSE: CCJ). The EPS rating is really bad at 9, but the SMR rating is a C.
We see on the chart why Cameco was chosen for today’s trade idea. Look at the lower rail of the channel and how it sets up with the 50-day moving average. From the low in late January, the stock bounced over $5. From the low in March, the stock bounced over $5. If it bounces over $5 from this past week’s low, the stock would move up to $20.59.
Buy to open the May 16-strike calls on CCJ at $2.30 or better. These options expire on May 21, 2021. I suggest a target gain of 100% and that means the stock will need to reach $20.60. This target lines up with the last two jumps rather nicely. I suggest a stop at $15.60.
— Rick Pendergraft
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