Stocks got a break from the selling pressure on Thursday as all four indices rose. Initial jobless claims came in better than expected and investors shrugged off the PPI numbers being higher than expected. The Nasdaq gained 0.72% and it was the only one of the four that didn’t gain over 1.0%.
The Russell gained 1.68% as the top performer. The Dow rallied by 1.29% and the S&P moved up 1.22%.
Nine of the 10 main sectors moved higher on Thursday with only the energy sector losing ground. Oil dropped 3.35% and the sector fell 1.35%.
The utilities sector led the way with a gain of 1.93% and it was followed closely by the industrial sector which jumped 1.87%. There were seven sectors that gained over 1.0% on the day.
My scans turned positive last night with 15 bullish signals and four bearish signals. Those results snapped a three-day streak of negative results.
The barometer jumped to -22.8 from -41.0 once the results were added in to the calculation.
With only 19 stocks between the two lists, there was only one bullish trade setup that caught my attention and one on the bearish side. The one that I feel gives us the best opportunity is a bullish trade on Avantor (NYSE: AVTR). The company was on the bullish list and it has great fundamental ratings. The EPS rating is 97 and the SMR rating is an A.
The daily chart shows an upwardly sloped trend channel forming over the last few months. The lower rail connects the lows from March and the low from this week. The stock also seems to be finding support at its 50-day moving average. It looks like the stock is ready to make its next move higher.
Buy to open the June 30-strike calls on AVTR at $1.70 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 $33.40. The stock peaked at $33.99 last month, so it won’t have to hit a new high to reach our target. I suggest a stop at $29.40.
— Rick Pendergraft
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