Three of the four main indices extended their winning streaks to three days, but the Russell wasn’t able to make it three in a row. The small-cap index dropped 1.52% on Thursday after leading the indices in the previous two sessions.
The Nasdaq led the way with a gain of 0.36% and it also spent the least amount of time in negative territory throughout the day. The S&P moved up 0.20% on the day and the Dow tacked on 0.07%.
Six of the 10 main sectors moved higher while four moved lower. The tech sector was the top performer with a gain of 0.73% and it was followed by the healthcare sector which gained 0.63%.
The energy sector dropped 1.16% on Thursday, but it had been the leading sector on both Tuesday and Wednesday. The financial sector fell 1.09% and those were the only two sectors that moved over 1.0% in either direction.
My scans remained bullish skewed last night, but the positive skew wasn’t nearly as great as the previous two days. There were 29 bullish signals generated and three bearish ones.
The barometer dropped from 105.4 to 80.3 once the results were added in to the calculation.
I wasn’t really looking to make a sixth straight bullish trade recommendation, but that is where the data keeps taking me. Of the signals generated last night, the one setup I liked the best was on Novartis (NYSE: NVS). The company’s fundamental ratings are pretty strong with an EPS rating of 66 and an SMR rating of an A.
What we see on the daily chart is a trend channel that has formed over the last five months and the stock just hit the lower rail. We see how the stock moved below its 50-day moving average and then bounced back above it. It did the same thing at the end of April and beginning of May, and then the stock rallied over 11%. I’m looking for a similar move this time.
Buy to open the September 87.50-strike calls on NVS at $4.90 or better. These options expire on September 17, 2021. I suggest a target gain of 100% and that means the stock will need to reach $97.30. The target is above the highs in January and June, but based on the recent low, an 11% move would put the stock up near $99. I suggest a stop at $87.00.
— Rick Pendergraft
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