Stocks halted their three-day losing streak on Wednesday after there was some positive news on the trade front. All four indices moved higher on the day.
The Russell led the way with a gain of 0.70% and it was followed by the S&P which moved up 0.63%. The Nasdaq tacked on 0.54% and the Dow gained 0.53%.
[hana-code-insert name=’adsense-article’ /]All 10 of the main sectors moved higher on the day with the energy sector leading the way with a gain of 1.5%.It was the only sector that gained more than 1.0%.
The second best performer was the financial sector with a move of 0.95%.
The materials sector experienced the smallest gain at 0.22%.
The industrial sector had the second smallest gain at 0.39%.
The scans turned positive after the move higher by the indices. There were 33 names on the bullish list and seven names on the bearish list. The barometer jumped considerably once these results were added in, moving to -21.8 from -51.4.
After several bearish trade ideas over the last week, I have a bullish trade idea for you today. The iShares MSCI Emerging Markets ETF (NYSE: EEM) appeared on the bullish list and the chart caught my attention. There aren’t the usual fundamental ratings for the EEM since it is an ETF, but the Tickeron Trend Prediction Engine generated a bullish signal on Tuesday and 78% of past predictions have been successful.
We see on the chart that the ETF has been trending higher for almost four months now. A trend channel has formed defining the cycles within the overall upward trend and the fund just bounced off of the lower rail. Yesterday’s bounce also took it back above its 50-day moving average in a similar fashion to what we saw in early October—just before a big short-term rally.
Buy to open the January 41.50-strike calls on EEM at $1.45 or better. These options expire on January 17. In order for these options to double the stock will need to reach $44.40. The stock peaked at $44.25 in early November and the upper rail of the channel is already above that price level. I suggest a target gain of 100% and a stop at $41.75.
— Rick Pendergraft
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