Stocks got hit hard on Friday as a couple of vaccine test results weren’t as good as hoped. Those results seemed to damped investor enthusiasm and all four of the main indices lost ground.
The Dow took the worst hit with a drop of 2.03% and the Nasdaq was close behind with a loss of 2.0%. The S&P 500 lost 1.93% and the Russell fell 1.56%.
All 10 sectors dropped on Friday with only two managing to keep the losses under 1.0%. The utilities sector fell 0.54% and the healthcare sector only lost 0.84%.
The worst performer was the energy sector with a drop of 3.32% and it was the only one to lose over 3.0%. There were five sectors whose losses exceeded 2.0% with the tech sector (-2.36%) and the consumer discretionary (-2.33%) being the worst.
I was a little surprised by the scan results on Friday as there were 49 bullish signals and only eight bearish signals. Given the broad selling, I didn’t expect to see such a strong positive result.
The barometer jumped up to 14.8 from -12.8 once these results were added in to the equation and that is the first positive reading since December 17.
Given the greater number of stocks to choose from on the bullish list, today’s trade idea is indeed a bullish one. TE Connectivity (NYSE: TEL) appeared on the bullish list and its fundamental ratings are pretty good. The EPS rating is 72 and the SMR rating is a B.
We see on the chart how the stock has been trending higher since June with a trend channel forming from July through September. The stock just hit the lower rail of the channel last week and it looks like it is ready for its next move higher. We see that the stochastic indicators were oversold and made a bullish crossover. The last two times the indicators did this, the stock gained over 20% in the next few months.
Buy to open the March 115-strike calls on TEL at $10.20 or better. These options expire on March 19, 2021. I suggest a target gain of 100% which means the stock will need to reach $135.40. The target is above the 52-week high, but below the 20% threshold mentioned above. I recommend a stop at $114.00.
— Rick Pendergraft
Legendary Stockpicker: "Buy this A.I. stock NOW" [sponsor]His award-winning system pinpointed NVDA and META before both stocks doubled. Now it's flashing "BUY" on this under-the-radar A.I. stock. MORE HERE...