Wednesday saw stocks jump right out of the gate after the ADP Employment Change report showed that private payrolls didn’t decline nearly as much as expected in May. All four indices were in positive territory for the entire day.
The Russell led the way once again with a gain of 2.39% and the Dow jumped 2.05% for the second best performance. The S&P tacked on 1.36% and the Nasdaq was the only that failed to gain at 1.0%, but it still logged a gain of 0.78%.
Nine of the 10 sectors moved higher while the healthcare sector fell by 0.19% as the lone sector in the red.The smallest gain on the day was the consumer staples sector at 0.13%.
The industrial sector was the leading sector on the day with a huge jump of 3.9% and it was followed closely by the financial sector which gained 3.73%.
There were a total of four sectors that gained over 2.0% on the day.
My scans remained bearish for the 12th straight night. There were 39 bearish signals and three bullish signals on Wednesday.
The barometer continued to move higher with the lower totals on both sides and the final reading last night was -46.7, up from -60.8 the night before.
None of the three stocks on the bullish list met my criteria for a bullish trade idea, so I have a bearish idea for you today. The company is Eversource Energy (NYSE: ES) and the utility has mixed fundamental ratings. The EPS rating is a 69 and the SMR rating is average at a C.
The daily chart shows how the stock has been trending lower since early March with that high connecting with the April high to form a downward sloped trend line. The stock moved above the trend line yesterday, but failed to close above it. The stock is overbought based on both the RSI and the stochastics.
Buy to open the July 90-strike puts on ES at $5.20 or better. These options expire on July 17. I suggest a target gain of 100% which means the stock will need to drop to $79.60. The stock was down near $73 in May. I recommend a stop at $88.50.
— Rick Pendergraft
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