The rally from Monday carried over to Tuesday as retail sales improved dramatically in May and after President Trump has proposed another economic package. The Russell led the way again with a gain of 2.3%.
The Dow gained 2.04% as the second best performer and the S&P moved up 1.9%. The Nasdaq tacked on 1.75% to bring up the rear on another risk-on day.
All 10 sectors moved higher again on Tuesday and this time it was the energy sector that led the way with a gain of 2.88%.The healthcare sector was the second best performer with a gain of 2.46%.
There were a total of five sectors that gained at least 2.0%.
Only two sectors failed to move up at least 1.0% and they were the communication services sector (0.82%) and the utilities sector (0.46%).
My scans turned decidedly bullish last night with 132 bullish signals and only five bearish signals. That is the biggest positive skew since March 24.
The barometer moved in to positive territory thanks to bullish results. The final reading for Tuesday was 46.2, up from -10.3 the night before.
Given the abundance of bullish signals, it shouldn’t be a big surprise that today’s trade idea is a bullish one. Radian Group (NYSE: RDN) appeared on the bullish list and the stock gets a score of 96 on the EPS rating system and it gets an A on the SMR grading scale.
The daily chart shows how the stock has been trending higher since the beginning of April with a trend channel forming to define the cycles within the trend. The stock just bounced off of its 50-day moving average and the lower rail. The stochastic indicators were down near oversold territory and made a bullish crossover last night.
Buy to open the August 15-strike calls on RDN at $2.75 or better. These options expire on August 21. I suggest a target gain of 100% for this trade and that means the stock will need to reach $20.50. The upper rail of the channel is just above $20 currently, but it should be above the $20.50 level within the next week or so. I recommend a stop at $14.75.
— Rick Pendergraft
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