Stocks rallied on Thursday as hopes for another stimulus package fueled investor optimism even as initial jobless claims came in higher than expected. All four main indices opened higher and remained in positive territory for the remainder of the day.
The Russell led the way with a gain of 1.30% while the other three all closed at all-time highs. The Nasdaq moved up 0.84%, the S&P tacked on 0.58%, and the Dow gained 0.49%.
Eight of the 10 sectors moved higher on the day with communication services and energy being the only two that lost ground. The energy sector fell 0.47% and the communication services sector dropped 0.25%.
The materials sector led the way with a gain of 1.15% and the healthcare sector jumped 1.07%. Those were the only two sectors that gained over 1.0%.
My scans turned in a third straight positive result with 35 bullish signals and seven bearish signals.
The barometer rose to 15.7 once these results were added in to the equation, rising from 5.4 the day before.
There weren’t any stocks on the bearish list that I liked the setup on and that left us with bullish options. There were three that got my attention with the setup for Walmart (NYSE: WMT) looking like the best option to me. The company scores an 83 on the EPS rating scale and it gets a B on the SMR grading scale.
The daily chart shows how the stock has been moving higher since early July with a trend channel forming to define the various cycles within the overall trend. The stock has just hit the lower rail of the channel and looks as though it’s primed for another leg higher. The stock also moved back above its 50-day moving average and the setup looks very similar to what we saw at the end of October/early November.
Buy to open the February 145-strike calls on WMT at $7.15 or better. These options expire on February 19, 2021. I suggest a target gain of 75% and that means the stock will need to reach $157.50. The stock will need to break to a new high to hit our target, but the target is only 7.8% from where it closed yesterday. I recommend a stop at $142.50.
— Rick Pendergraft
This is the #1 Stock to Buy for the AI Tidal Wave [sponsor]Marc Chaikin warned people about NVDA before its 2023 bull run - now he's naming his next pick or the AI tidal wave. Learn more here.