Stock’s roared back to life on Monday and all four of the main indices posted significant gains. The Nasdaq opened in negative territory and was the only one that saw red figures at any point during the day. It would end up with the smallest gain at 0.79%.
The Russell was the top performer on the day with a gain of 2.16%. The Dow jumped 1.76% and the S&P rallied by 1.4%.
All 10 of the sectors moved higher on the day and only two failed to gain at least 1.0%. The consumer discretionary sector experienced the smallest gain at 0.77% and the communication services sector gained 0.97% as the second worst performer.
The energy sector was far and away the top performer with a gain of 4.26%. The financial sector gained 2.33% and the industrial sector moved up 2.21% for third place.
The scan results turned decidedly more positive on Monday with 83 bullish signals and six bearish signals generated.
The barometer moved up to 30.9 from -3.7 once those results were added in to the equation and that is the first positive reading for the indicator since May 18.
With so many stocks and ETFs to choose from on the bullish list, there were a number of them that got my attention. In the end I liked the combination of fundamentals and technicals on Dick’s Sporting Goods (NYSE: DKS) the best. The company scores well in its fundamental ratings with an EPS rating of 87 and an A SMR rating.
We see on the daily chart how the stock has been trending higher since mid-December with a trend channel forming over the last four months. The stock moved down near the lower rail of the channel last week and it bounced sharply higher yesterday. The stochastic indicators were close to oversold territory and made a bullish crossover last night. We see a similar development in late May when the stock jumped sharply.
Buy to open the August 90-strike calls on DKS at $9.20 or better. These options expire on August 20, 2021. I suggest a target gain of 75% and that means the stock will need to reach $106.10 to hit our target. The target is above the high on June 14, but the upper rail of the channel is already above $103 and its climbing fast. I think $106 or higher is a reasonable target. I suggest a stop at $88.00.
— Rick Pendergraft
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