Tuesday turned out to be another solid day for stocks as all four main indices moved higher on the day. The Dow and S&P both opened slightly lower, but then turned it around and moved in to positive territory in the early going. The Nasdaq and Russell both opened higher and remained in positive territory throughout the day.
The final figures showed the Nasdaq with a gain of 0.79% to lead the way and it was followed by the S&P with a gain of 0.51%. The Russell would rally 0.43% and the Dow moved up 0.20%.
Nine of the 10 main sectors moved higher on the day with the utilities sector being the lone on in the red for the day. The sector dropped 0.61%.
The consumer discretionary sector gained 0.94% to lead the way and it was followed closely by the tech sector which jumped 0.91%.
My scans turned decidedly positive on Tuesday with 145 bullish signals and only seven bearish signals.
The barometer jumped to 81.6 from 30.9 once these results were added in to the equation. Last night’s reading is the highest for the indicator since February 2.
Obviously there were a great number of stocks and ETFs on the bullish to choose from last night. I went through all of the charts and weighed the fundamentals as well. After all was said and done, I felt a bullish trade on the iShares MSCI Eurozone ETF (NYSE: EZU) would give us the greatest odds of success. Because it is an ETF we don’t have the fundamental readings that we usually look at, but the fund recently received a bullish signal from Tickeron’s trend prediction tool. The signal showed a 90% probability of the fund moving higher over the next month based on previous signals.
The daily chart shows how a trend channel has formed over the last five months and the fund just hit the lower rail in the last few days. The daily stochastic indicators are down near oversold territory at this time, but they did make a bullish crossover last night. We see a similar development at the end of January and the fund rallied nicely over the next few months after that bullish crossover.
Buy to open the August 48-strike calls on EZU at $2.70 or better. These options expire on August 20, 2021. I suggest a target gain of 100% and that means the fund will need to reach $53.40. Looking at the move from early March, the fund rallied over 12% and from the recent low we only need a rally of 11% to reach our target. I suggest a stop at $48.50.
— Rick Pendergraft
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