Thursday saw stocks move higher for the most part with three of the four main indices moving higher and the bulk of sectors moving up. It wasn’t a clear cut risk-on day where the indices opened higher and continued to climb throughout the day, but the afternoon session did see the indices climb.
The Russell dropped 0.39% as the only one of the four to finish in the red. The Dow led the way with a gain of 0.71% and it was followed closely by the S&P which gained 0.68%. The Nasdaq barely moved back in to positive territory and finished with a gain of 0.22%.
Eight of the 10 sectors moved higher on Thursday with the communication services sector jumped 2.73% to lead the way. The financial sector rallied by 1.78% to finish in second place and the energy sector moved up 1.20%.
The healthcare sector fell 0.38% as the worst performer and the tech sector lost 0.08% as the only other sector in the red.
My scans turned decidedly more negative last night with 97 bearish signals and 18 bullish signals. There was also a defensive nature to the bullish list with 13 of the 18 signals coming from the consumer staples and utilities sectors.
The barometer dropped to -45.2 from -13.3 once these results were added in to the calculation.
Despite the fact that there were far more stocks and ETFs on the bearish list to choose from, there was one trade setup that jumped out at me and it was on the bullish list. Albertsons (NYSE: ACI) has great fundamental ratings and I like the chart as well. The EPS rating is extremely high at 98 and the SMR rating is an A.
We see how the stock has been trending higher since September and how a trend channel has formed over the last four or five months. The stock just hit the lower rail of the channel and has bounced the last few days. The stochastic indicators had dropped down to their lowest level since February and they made a bullish crossover last night. Based on that pattern I look for the stock to make its next move higher.
Buy to open the June 17.50-strike calls on ACI at $2.05 or better. These options expire on June 18, 2021. I suggest a target gain of 100% and that means the stock will need to move up to $21.60. The target would mean a new high for the stock, but based on the moves in December and January, and again in March, I think it can reach our target. I suggest a stop at $17.40.
— Rick Pendergraft
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