In hopes of good news from the G20 meeting on Saturday, stocks moved higher on Friday and that turned out to be a good move. News came out over the weekend that Presidents Trump and Xi were suspending current tariffs in order to continue working on a deal.
The final numbers from Friday showed all four of the main indices moved higher, but it was the Russell that really stood out with a gain of 1.29%. The S&P moved up 0.58% and the Nasdaq tacked on 0.48%. The Dow lagged the other indices, but it still gained 0.28%.
[hana-code-insert name=’adsense-article’ /]Nine of the 10 main sectors gained ground on Friday with the consumer staples sector being the lone one in the red with a very modest drop of 0.07%.The financial sector was the top gainer on the day with a move of 1.47%.
The energy sector moved up 1.16% and it was the only other sector to gain over one percent.
My scans turned in another bullishly skewed result on Friday with 46 names on the bullish side and only five on the bearish side.
The barometer finally moved in to positive territory with a reading of 14.1, up from -24.4 on Thursday.
With the bulk of the signals coming from the bullish scan, I have a third straight bullish trade idea for you.
The iShares U.S. Home Construction ETF (NYSE: ITB) was one of the 46 names on the list. There aren’t traditional EPS and SMR ratings on the fund like I usually look at, but there was a bullish signal from the Tickeron Trend Prediction Engine on Friday. The signal had a confidence level of 88% and past predictions on the ITB have been successful 95% of the time.
The chart shows a trend channel has formed over the course of 2019 with the lower rail connecting the closing lows from January, March and last week. The stochastic readings partially reached oversold territory last week and that is only the third time that has happened since the beginning of the year. The indicators made a bullish crossover on Friday.
Buy to open the August 36-strike calls on ITB at $2.90 or better. These options expire on August 16. In order for these options to double the fund will need to reach $41.80. The fund will have to break to a new high to get a double, but I think it can get there based on previous swings. I suggest a target gain of 100% with a stop at $36.85.
— Rick Pendergraft
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