Another Monday and another successful vaccine announcement—it seemed like déjà vu. When Moderna announced that its vaccine showed a 94.5% efficacy rate in preventing COVID-19, it set stocks up for another big day of gains and they didn’t disappoint. The gains weren’t as big as last Monday, but all four indices produced significant gains to the upside.
The Russell led the way with a gain of 2.37% and it was followed by the Dow which moved up 1.6%. The S&P tacked on 1.16% and the Nasdaq gained 0.80%.
Nine of the 10 sectors moved higher on the day with the lone sector in the red being the healthcare sector. It doesn’t make much sense, but the sector fell 0.17% on the day. Moderna (Nasdaq: MRNA) jumped almost 10%, but many of the other pharmaceutical stocks fell.
On the plus side, the energy sector experienced the biggest move once again and this time it was 6.64%. Two other sectors gained over 2.0% – the industrial sector jumped 2.44% and the financial sector gained 2.22%.
My scans saw a big slowdown in the number of signals generated on both sides. There were eight bullish signals and 11 bearish signals and this makes seven straight days of negatively skewed results.
The barometer continued to climb from its big negative readings last week and this time it jumped to -27 from -48.3 on Friday.
Of the eight stocks on the bullish list, five of them were related to the gold sector. The one I like best is Barrick Gold (NYSE: GOLD) and it scores well in the fundamental ratings. The EPS rating is an 87 and the SMR rating is a B.
The stock looks to have formed a double-bottom in the $25.50 area. The stock bottomed in that range in late October before rallying sharply. The stock has since dropped back down to the $25.50 area, but seems to have pretty good support there. In addition, the daily stochastic indicators are in oversold territory and made a bullish crossover last night.
Buy to open the January 24-strike calls on GOLD at $2.62 or better. These options expire on January 15, 2021. I suggest a target gain of 100% and that means the stock will need to reach $29.24. The high between the two lows was $29.60, so it won’t have to break that high to reach our target. I recommend a stop at $25.00.
— Rick Pendergraft