For the first time in seven days the S&P moved in the same direction for two days in a row. The rally that started on Friday carried over to Monday and all four indices experienced solid gains.
The Russell led the way with a gain of 1.78% and the Nasdaq followed with a move of 1.47%. The Dow tacked on 0.89% and the S&P gained 0.72%.
Six of the 10 sectors moved higher on Monday. The tech sector really stood out with a gain of 2.46%. The healthcare sector had the second best performance, moving up 1.03%.
The utilities sector fell 1.08% and that was the worst performance of the bunch. The materials sector dropped 0.56% for the second worst decline.My scans turned a little more negative last night with 48 bearish signals and 16 bullish signals.
The barometer came with a negative reading for the 12th straight night. The indicator fell to -18.3 from -7.8.
The scans were a little odd last night as there were far more negative fundamental indicators on the bullish list than on the bearish list and vice versa. I’m not sure what to make of that, but the trade setup that I liked the best was a bullish one.
The iShares Nasdaq Biotechnology ETF (Nasdaq: IBB) is the subject of today’s trade idea and the ETF got a bullish signal from the Tickeron AI Platform as well. Based on past signals, the platform shows the odds of a move higher over the next month are 84%.
We see on the chart how the IBB has been trending higher over the last five months and a trend channel has formed over the last three months. The fund just bounced off of the lower rail of the channel and looks poised for another cycle higher. We also see that the daily stochastic indicators hit oversold territory and made a bullish crossover last night.
Buy to open the October 135-strike calls on IBB at $9.30 or better. These options expire on October 16. I suggest a target gain of 100% for this trade and that means the fund will need to reach $153.60. That is above the high in July, but based on the move the fund made from mid-June through mid-July, it is certainly achievable. I recommend a stop at $134.00.
— Rick Pendergraft
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