Friday saw the three main indices move higher for a fourth straight day and the Russell returned to the positive side of the ledger. Even though it finished higher on the day, the small-cap index was the only one that spent time in negative territory on Friday and it finished with the smallest gain (+0.46%).
The Nasdaq was the top performer with a gain of 1.04% and the S&P was close behind with a jump of 1.01%. The Dow rounded the gains with a move of 0.68%.
Nine out of the top 10 sectors moved higher on Friday with only the energy sector losing ground with a loss of 0.37%.
The communication services sector was the big winner with a gain of 2.48% and three others moved up over 1.0%. The utilities sector jumped 1.28% as the second best performer. Consumer staples and healthcare were the other two to advance more than 1.0%.
My scans were pretty slow on Friday with only five bullish signals and only one bearish signal being generated.
The barometer fell to 46.1 with the small differential between the two lists. The reading on Thursday was 80.3.
I keep looking for balance among the trade ideas, but the scans just keep producing more bullish signals than bearish signals. The signal I liked best from Friday was on T-Mobile US, Inc. (Nasdaq: TMUS). The company has an EPS rating of 69 and the SMR rating is a B.
The chart shows how the stock has been moving higher since late February and a trend channel has formed since then. The stock just hit the lower rail and support from its 50-day moving average. The stock did drop below the moving average on Thursday, but it didn’t close below the trend line. We saw a similar set up at the beginning of May and the stock jumped sharply over the next five weeks or so.
Buy to open the September 140-strike calls on TMUS at $7.70 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 $155.40. The target would mean a new high for the stock, but it is only a little over 9% from the recent low. The rally from early May through early June was 17%. I suggest a stop at $139.50.
— Rick Pendergraft
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