Friday was mostly a good day for stocks after the June employment report showed greater job growth than expected. Three of the four main indices moved higher while the Russell fell 1.01%.
The Nasdaq was the top performer with a gain of 0.81% and it was followed by the S&P with a move of 0.75%. The Dow rounded out the gains by tacking on 0.44%.
Eight of the 10 main sectors moved higher on the day. The energy sector dropped 0.22% and the financial sector declined 0.11% as the two that finished in the red.
The tech sector jumped 1.32% to lead the way and it was followed by the healthcare sector with a gain of 0.96%. The consumer discretionary sector moved up 0.88% to finish in third place.
My scans generated 39 bullish signals and 23 bearish signals on Friday night, giving us two straight positive results after the five-day stretch of negative readings.
Once the results were added in to the calculation, the barometer moved in to positive territory with a reading of 2.0. Thursday’s reading was -11.5.
There were four stocks on each list that got my attention for their charts, and after considering each signal I felt a trade on the iShares MSCI Australia ETF (NYSE: EWA) is the best option at this time. The fund was on the bullish list and it got a bullish signal from Tickeron’s trend prediction tool recently. Tickeron is an AI based trading platform and the signal shows a 90% chance the fund moves higher over the next month.
We see how the EWA has been trending higher since late October, but the trajectory of the advance over the last five months got my attention. A trend channel has formed to define the various cycles within the overall upward trend. The stock hit the lower rail of the channel last week and it now looks as though it is ready for its next leg higher.
Buy to open the October 25-strike calls on EWA at $1.80 or better. These options expire on October 15, 2021. I suggest a target gain of 75% and that means the stock will need to reach $28.15. To reach our target the stock will need to move up 9.5% from the recent low—a reasonable goal in my opinion. I suggest a stop at $25.40.
— Rick Pendergraft
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