Stocks got off to a pretty good start on Monday with all four indices opening higher. Unfortunately it wouldn’t stay that way long as the Nasdaq would drop in to negative territory during the morning session and would remain there for the rest of the day. The tech-heavy index would finish lower by 0.48%.
The Dow was the most consistent of the four and finished with a gain of 0.70%. The Russell gained 0.49% and the S&P would move up 0.27% after a late day decline.
Six of the 10 sectors moved higher on the day and they were led by the energy sector with a gain of 2.75%. The materials sector jumped 1.49% and that was good enough for second place.
The communication services sector drop 0.53%, the consumer discretionary sector fell 0.48%, and the tech sector dropped 0.28%.
My scans produced a sixth straight negative result last night with 43 bearish signals and 17 bullish signals.
The barometer did move up a little since the result from Monday wasn’t as bad as the three previous days. The final reading last night was -54.6, up from -64.8 on Friday.
After four straight bearish trade ideas, I have a bullish one for you today. Automatic Data Processing (Nasdaq: ADP) appeared on the bullish list and it has good fundamental ratings. The EPS rating is at 73 and the SMR rating is an A.
The chart for ADP is what really jumped out at me compared to all the other stocks and ETFs on both the bullish and bearish list. In addition to bouncing off the support of the 50-day moving average, it also bounced off the lower rail of a trend channel that has formed over the last four months.
Buy to open the June 190-strike calls on ADP at $6.00 or better. These options expire on June 18, 2021. I suggest a target gain of 100% and that means the stock will need to reach $102. The target is above the high from April, but the upper rail of the channel is already in that vicinity. I suggest a stop at $184.75.
— Rick Pendergraft
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