Stocks moved higher again on Thursday and all four of the main indices gained ground for a second straight day. The Dow dipped in to negative territory briefly near midday, but other than that all four were in positive territory for the entire day.
The Russell led the way with a gain of 1.09% and it was followed by the S&P with a move of 0.80%. The Nasdaq gained 0.50% and the Dow tacked on 0.43%.
All 10 sectors moved higher for a second straight day, but as a whole the gains weren’t as impressive as Wednesday. The energy sector led the way with a jump of 3.75% and that far and away the best performance. The utilities sector gained 1.83% as the second best performer while three other sectors gained over 1.0%.
There were four sectors that failed to gain 1.0% and the healthcare sector experienced the smallest gain at 0.49%.The consumer discretionary and consumer staples sectors tied for the second smallest gain with each tacking on 0.66%.
My scans remained negative for a third straight night and this time there were 27 bearish signals and nine bullish signals.
The barometer moved up slightly once these totals were added in to the calculation. The reading for Thursday was -22.5 after a reading of -25.2 on Wednesday.
Even though there were far more bearish signals to consider, the trade idea I liked best for today is Monster Beverage (Nasdaq: MNST). The company has great fundamental ratings with an EPS score of 94 and an SMR rating of an A.
The first thing that jumped out at me on the chart was how the $77.50 area appeared to be the point of a double bottom. The more I looked at the chart I noticed how the current pattern looks very similar to the pattern we saw in late June. After the second bullish crossover from the stochastic indicators, Monster went on to gain over 21% in the next two months. Another move of that magnitude would put the stock up above $95.00.
Buy to open the December 75-strike calls on MNST at $7.70 or better. These options expire on December 18. I suggest a target gain of 75% on this trade and that means the stock will need to reach $88.48. That is slightly above the high in early September, but if the stock moves up this time like it did from the June pattern, the target shouldn’t be a problem. I recommend a stop at $75.50.
— Rick Pendergraft
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