The indices moved higher again during the holiday shortened session on Wednesday. The S&P moved to yet another new high with a gain of 0.77% and that was the biggest move of the four. The Nasdaq gained 0.75% and the Russell gained 0.74% and those were good enough numbers for second and third. The Dow gained 0.67% and that was the smallest gain of the four.
All 10 of the main sectors moved higher on Wednesday and most of the gains were pretty solid. The consumer staples sector was the top performer with a gain of 1.24%.
[hana-code-insert name=’adsense-article’ /]The consumer discretionary sector moved up 0.87% and that was the second best performance.The energy sector tacked on 0.40% and that was the smallest gain of the bunch.
The materials sector moved up 0.51% and that was the second smallest gain.
My scans produced negatively skewed results for the second straight night with 44 names on the bearish list and only five on the bullish side.
The second straight bearish result was enough to move the barometer in to negative territory with a reading of -18.6.
That negative reading halted a string of three straight positive readings.
Despite the bearish skew and the barometer moving in to negative territory, I thought it best to keep a little balance to the trade ideas at this time and have a bullish idea for you today. Unitedhealth Group (NYSE: UNH) appeared on the bullish list on Wednesday night and it has some pretty solid fundamental ratings. The EPS rating is a 95 and the SMR rating is a B.
The daily chart shows a trend channel forming over the last few months and the stock just hit the lower rail of the channel. After hitting the rail in May and June, the stock rallied nicely. An additional benefit at this time is that the stock has moved back above its 50-day moving average and that trend line should act as additional support.
Buy to open the August Week 2 245-strike calls on UNH at $7.50 or better. These options expire on August 9. In order for these options to double the stock will need to reach $260. The upper rail of the channel is slightly above the $255 level currently and should move up to $260 in the next week or two. I suggest a target gain of 100% with a stop at $241.00.
— Rick Pendergraft
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