The indices opened higher on Thursday, but had a hard time holding on to the gains late in the day. News came out that Pfizer was having supply chain issues with its vaccine. Stocks sold off in the last hour of trading, but three of the four still managed to close with gains.
The Russell led the way with a gain of 0.58% and it was followed by the Dow which moved up 0.29%. The Nasdaq tacked on 0.23%, but the S&P lost 0.06% after its big drop.
The sectors were evenly split on the day with five moving higher and five moving lower. As for the leaders, the energy sector led the way with a gain of 1.05%, but the second best gain was only 0.28% and that came from the consumer discretionary sector.
Utilities stocks took the biggest hit and the sector fell 1.04%. The second worst performer was the materials sector with a drop of 0.69%.
My scans remained negative, but continued to close the gap. There were 10 bullish signals and 33 bearish signals last night.
The barometer continued to climb and finished at -35.8, up from -55.0 on Wednesday.
There were only two trade setups that really stood out last night with one from the bullish list and one from the bearish list. I decided that the bullish trade idea gave us the better odds of success. The stock is the utility company PPL Corp. (NYSE: PPL). The company’s fundamental ratings are better than average with an EPS rating of 60 and an SMR rating of a B.
We see on the chart how the stock has been moving higher over the last five months with a trend channel forming that defines the cycles within the overall trend. The stock came close to hitting the lower rail on Wednesday, but turned higher instead. We see that the daily stochastic indicators made a bullish crossover last night and the last time that happened in September it was a good sign for the stock.
Buy to open the January 27-strike calls on PPL at 1.75 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 $30.50. The stock was above that level just over a week ago. I recommend a stop at $27.25.
— Rick Pendergraft
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