The market got off to a good start this week as all four of the main indices opened higher and remained in positive territory throughout the day. It’s been a while since we have seen such an occurrence.
The Nasdaq led the way yesterday with a gain of 1.41% and it was followed by the S&P with a gain of 0.99%. The Dow and the Russell both notched gains of 0.54%.
Nine of the 10 sectors would move higher on the day with only the utilities sector losing ground. The sector dropped 0.18%.
Communication services stocks led the way with a gain of 1.82% and it was followed closely by the tech sector with a gain of 1.78%. The energy sector rebounded with a gain of 1.0% and those were the only three that gained 1.0% or more.
My scans turned in a second straight positive result on Monday with 30 bullish signals and 10 bearish signals.
The barometer jumped with the positive results, but it remains in negative territory with a reading of -2.7. That reading is up from -19.8 on Friday.
There were far more stocks and ETFs on the bullish list that got my attention than on the bearish list. Between the charts and the fundamentals, there was only one stock on the bearish list that got my attention. Therefore I decided to go with a bullish trade and it is on the Global X US Infrastructure Development ETF (AMEX: PAVE).
Infrastructure has been in focus of late with President Biden’s proposed infrastructure plan receiving a certain degree of bipartisan support. The total cost of the bill is a sticking point, but both sides agree that the federal government does need to boost infrastructure spending and the industry should benefit once a bill is finally passed.
The daily chart shows how the fund has been trending higher and it shows a trend line connects the lows from the last six months. The fund just hit the trend line last week and looks as though it is set to make another move higher. We also see that the stochastic indicators have dropped down below the 30 level for only the third time since late October and made a bullish crossover last night. The moves from October through early December and from late January through mid-March both saw the fund gain over 20%.
Buy to open the July 25-strike calls on PAVE at $1.85 or better. These options expire on July 16, 2021. I suggest a target gain of 100% and that means the fund will need to reach $28.70. The target is higher than the recent high, but based on the moves off of the trend line in November and January, I think the target is reachable. I suggest a stop at $25.10.
— Rick Pendergraft
See What One Ticker... One Trade... EVERY WEEK... Can Do for YOU [sponsor]New research proves that trading one ticker every week has had the ability to produce extraordinary gains... Including a rare 2,614% in under 11 days. See this groundbreaking new discovery for yourself. SHOW ME ONE TICKER PAYOUTS