Stocks continued their rally in to Monday with a long list of economic reports and even more key earnings reports due out over the next four days. All four indices saw sizable gains on the day, but the Russell was far and away the top performer with a gain of 4.21%.
The Dow jumped 1.51% as the second best performer and the S&P tacked on 1.47%. The Nasdaq lagged the other three indices, but still notched a gain of 1.11%.
All 10 of the main sectors experienced gains for a second straight day and this time it was the financial sector that topped the list.The sector logged a gain of 3.5%.
Three other sectors notched gains of more than 2.0% with the materials sector moving up 2.57% as the second best performer.
Consumer staples were the biggest laggard on Monday with the sector only gaining 0.31%.
The communication services sector gained 0.84% and the tech sector tacked on 0.88%.
These were the only three sectors that failed to gain at least 1.0%.
My scans turned in their second straight positive result, but it wasn’t skewed by much. There were 18 bullish signals and 16 bearish signals.
The barometer moved up again and came in at -1.8 last night, up from -11.3 on Friday.
Over half of the stocks on the bullish list were from the financial sector and today’s trade idea is another bullish one on a financial stock. Ally Financial (NYSE: ALLY) was on the bullish list and the company scores an 87 on the EPS rating scale. It gets a B on the SMR grading system.
The chart shows a similar pattern to what we saw yesterday with Principal Financial Group. The stock has put in a series of higher lows since bottoming in March. The stock has hit resistance in the $18 range twice since the big drop, but it won’t have to break through there to hit our target.
Buy to open the June 14-strike calls on ALLY at $2.50 or better. These options expire on June 19. I suggest a target gain of 50% on this trade. The stock won’t have to break the aforementioned resistance to hit that target. I suggest a stop at $13.75.
— Rick Pendergraft