Stocks carried the momentum from last week and the positive news from the employment report on Friday in to this week. All four of the main indices posted significant gains.
The Nasdaq led the way with a gain of 1.67% and it was followed by the S&P which moved up 1.44%. The Dow tacked on 1.13% and the Russell was the only one that failed to gain more than 1.0%, but still rallied by 0.43%.
Nine of the 10 main sectors moved higher on Monday with only the energy sector losing ground. Oil fell over 4% on the day and that led to a 2.44% drop from the sector.
Three sectors posted gains greater than 2.0% and they were led by the consumer discretionary sector with a gain of 2.26%. The communication services sector jumped 2.09% and the tech sector rallied by 2.01%.
My scans slowed down with the number of signals on both sides and they also turned negative for the first time in nine days. There were 10 bearish signals and six bullish signals.
The barometer dropped to 15.4 from 28.2 once the results from above were added in to the calculation.
Today’s trade idea is yet another bullish one and it is another one that is based mostly on the technical analysis. The subject company is Colfax (NYSE: CFX) and the industrial company’s fundamental ratings are average. The EPS rating is a 42 and the SMR rating is a C.
The daily chart shows how the stock has been trending higher with a trend channel forming that defines the cycles within the overall trend. The stock just hit the lower rail of the channel and looks poised to make another move to the upside. We saw pretty big jumps off the November low and the February lows. Each of those rallies exceeded 35%.
Buy to open the June 42.50-strike calls on CFX at $5.00 or better. These options expire on June 18, 2021. I suggest a target gain of 100% and that means the stock will need to reach $52.50. That target is above the highs in March, but it is only 17.3% from the current level. I recommend a stop at $42.90.
— Rick Pendergraft
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