After a shaky start and three of the four indices being in negative territory, things turned positive after stimulus talks appeared to improve. All four would end up in positive territory.
The Russell led the way with a gain of 1.65%. The Dow and the S&P would finish with gains of 0.54% and 0.52%, respectively. The Nasdaq moved up 0.19% as the laggard of the bunch.
Eight of the 10 sectors moved higher on the day with tech falling 0.47% and the consumer staples sector losing 0.05% as the two that lost ground.The energy sector continued with its extreme volatility and was the leading sector on Thursday.
The sector gained 4.13% on the day. The financial sector jumped 1.99% as the second leading performer.
My scans turned positive last night with 51 stocks on the bullish list and seven bearish signals.
The barometer turned positive with a reading of 15.7. It was the first positive reading since September 30.
With far more bullish signals to choose from, I was able to consider several stocks with good fundamentals and technical situations that looked bullish. Ultimately there were three where I considered the risk/reward relationship of the options. The best setup was on Verizon Communications (NYSE: VZ) and it has an EPS rating of 77 with an SMR rating of a B.
What caught my attention the most on the chart was how the stock had seen the $57 area act as resistance back in the second quarter. It broke through that resistance in August and now appears to be finding support at the same area. The stock is oversold based on both the RSI and the stochastic readings. The last time both were in oversold territory at the same time was in late June and the stock rallied sharply from there.
Buy to open the December 55-strike calls on VZ at $3.40 or better. These options expire on December 18, 2020. I suggest a target gain of 75% and that means the stock will need to reach $60.95. The stock peaked at $60.85 in early September so I suggest keeping an eye on that level acting as possible resistance. I also suggest a stop at $56.00.
— Rick Pendergraft
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