All four indices moved higher on Wednesday, but it was a clear-cut risk on day as the Nasdaq and the Russell both spent a considerable amount of time in negative territory throughout the day. Those two indices would lag the other two with gains of 0.24% and 0.18%, respectively.
The Dow led the way with a gain of 0.62% and the S&P was close behind with a gain of 0.57%.
Eight of the 10 sectors moved higher while one moved lower and one was unchanged. The financial sector was the unchanged one and the energy sector dropped 1.23% as the only one in the red.
The utilities sector jumped 1.54% and the materials sector tacked on 1.16% as the top performers.
The barometer actually moved higher because the discrepancy between the two lists wasn’t as great as it had been in recent days. The final reading was -55.4, up from -66.1.
After four straight bearish trade ideas I felt like we needed a bullish trade in the mix.
Even though there only six signals to choose from, I found one that I like on Bank of New York Mellon (NYSE: BK). Of course the stock was on the bullish list, and it has good fundamental ratings with an EPS rating of 79 and an SMR rating of a B.
We see on the daily chart how the stock has been trending higher over the last four months and how a trend channel has formed to define the different cycles. The stock is at the lower rail currently and the daily stochastic indicators are in oversold territory. The indicators did make a bullish crossover last night. I look for the stock to rally in the next few weeks.
Buy to open the September 35-strike calls on BK at $2.65 or better. These options expire on September 18. I suggest a target gain of 100% for this trade and that means the stock will need to reach $40.30. The stock was up at the $43 level in early June. I recommend a stop at $34.50.
— Rick Pendergraft