Options specialist Larry McMillan targets a move to new highs in the S&P 500 and has issued a buy on IBM (NYSE: IBM). In his trading service, The Daily Strategist, he notes, "Despite a pullback in recent days, we expect the major trend upmove to resume. The financial sector has continued to rally, which is positive."
And, he adds, as long as the setback in the energy sector doesn't develop into a major technical breakdown, the pullback to date is "nothing to be overly concerned about, particularly given the longer-term positive trend."
Technically, he notes that market breadth has turned positive – erasing last week's Sell signals. He notes, "For continued confirmation of the bull case, we would expect to see breadth numbers continue to register increased overbought readings."
Meanwhile, he adds, the equity-only put-call ratios continue to trend lower – which is bullish. Overall, he concludes, "We are going to maintain our view of a move towards new all-time highs for S&P 500 above 1,555. And, we expect an upmove to resume soon."
As for individual stocks, his rather complex technical analysis points to IBM as a new trading buy. In particular. IBM has received what he calls a put-call ratio buy signal.
Previous such put-call ratio signals, he notes, have been effective in IBM. In addition, he forecasts, "The stock is on the verge of breaking out to a new high and, therefore, we are going to recommend establishing a position. For those familiar with options, he specifically recommends buying the November 120 calls.
Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.
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