Friday was a bit choppy for stocks even though all four indices opened higher. Three of the four would drop in to negative territory during the morning session, but they would bounce back and all four of the main indices would finish in the black. The Russell was the only one that didn’t move in to negative territory at any point during the day and it would finish with a gain of 1.06%.
The Nasdaq moved up 0.35% as the second best performer and it was followed by the S&P with a gain of 0.19%. The Dow was in negative territory almost the entire day, but inched up 0.04% at the end of the day.
Eight of the 10 sectors moved higher on Friday with the financial sector leading the way with a gain of 0.64%. The tech sector was close behind with a move of 0.60% and the consumer discretionary sector gained 0.55% for third place.
The healthcare sector dropped 0.71% as the worst performer and the only other sector in negative territory was the energy sector with a decline of 0.34%.
My scans remained negative on Friday, but the size difference between the lists dropped significantly. There were 21 bearish signals and 17 bullish signals.
The barometer moved up to -22.4 from -35.1 once the scan results were added in to the calculation. This is the best reading for the indicator since the last trading day of May.
After considering three of the stocks on the bullish list and one on the bearish list, I decided a bullish trade on Ball Corp. (NYSE: BLL) was the best of the bunch. The company was on the bullish list and it has great fundamental ratings. The EPS rating is 84 and the SMR rating is an A.
The stock hit my bullish list due to the daily indicators, but Ball had also been on my radar for its weekly chart. We see on the weekly chart that the $80 level has been a key support/resistance level in the past and now looks to be acting as support. The weekly stochastic indicators are hitting oversold territory at this time. I look for the stock to bounce off the support at $80 and rally in the coming weeks.
Buy to open the August 77.50-strike calls on BLL at $6.00 or better. These options expire on August 20, 2021. I suggest a target gain of 100% and that means the stock will need to reach $89.50. The stock was up above $94 in April and May, so it won’t have to break through that recent high to hit our target. I suggest a stop at $78.50.
— Rick Pendergraft
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