We saw mixed results for stocks on Monday and that resulted in two indices moving higher and two moving lower. The Russell was the only one that opened higher and it would remain in positive territory throughout the day, finishing with a gain of 1.43%. The Nasdaq opened in negative territory, but it moved in to positive territory in the morning session and finished higher by 0.49%.
The S&P lost 0.08%, but the index was substantially lower at the lows of the day before a late rally trimmed the loss. The Dow fell 0.36% as the worst performing index.
On the sector front we saw six move lower, one finish unchanged, and three moved higher. The communication services sector led the way with a gain of 0.52% and it was followed by the healthcare sector with a gain of 0.35%.
The materials sector was the worst performer with a drop of 1.22%. It was followed by the industrial sector which fell 0.69% and the financial sector declined 0.65%.
The scans produced another negative result on Monday with 62 bearish signals and 17 bullish signals.
Even though the scan results were negative, the barometer did manage to move up a little as the size difference between the two lists has been shrinking in the last few days. Monday’s reading was -58.5, up from -65.3 on Friday.
There almost four times as many stocks on the bearish list than there were on the bullish list, but there were three stocks on each list that got my attention. After looking at the whole picture, I felt like Bristol Myers Squibb (NYSE: BMY) was the best opportunity. It was on the bullish list and its EPS rating is an 84 and its SMR rating is an A.
Looking at the daily chart we see how the stock has been trending higher since March and there is a channel that defines the cycles pretty well. The stock is hovering near the lower rail of the channel and the stochastic indicators are in oversold territory. There is also a second layer of support with the 50-day moving average just above the lower rail of the channel.
Buy to open the July 62.50-strike calls on BMY at $2.92 or better. These options expire on July 16, 2021. I suggest a target gain of 100% and that means the stock will need to reach $68.34. The target is slightly above the high from May, but the upper rail of the channel is already above that level. I suggest a stop at $62.90.
— Rick Pendergraft
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