Invest and Trade Profitably with Jon Johnson

Weekend Wrap-Up for 9/29

1. Market Summary
Jon Johnson
Excerpted from Thursday’s paid content of “Investment House Daily” by Jon Johnson.

Stocks Set To Rebound, Achieve Mixed Success

– Stocks were set to rebound, but faded as growth stocks led the downside.
– The data are a bit disappointing regarding the United States’ gross domestic product (GDP), but are solid regarding pending home sales.
– China and the United States continue to trade barbs regarding trade.
– Large caps are low energy.
– Bonds show the 2 year/10 year spread is back to flat and ready to invert again.
– Repurchase agreements remain the biggest story not told.
– The path of least resistance does not appear upward, but could the Fed be in the market yet again?
– Someday, a trend will come.

After the European markets closed, the news seemed to indicate that China was buying more U.S. agricultural goods. Pending home sales jumped 1.6% versus the 1% that was expected. This was a gain of 2.48% year-over-year and the biggest yearly increase since April 2016.

In the face of the impeachment debate, the American people found out that the whistleblower witnessed none of that which he complained about. Everything was hearsay that should be investigated, but won’t be. Stocks rallied into the last hour.

Then, word broke that the Trump administration likely will not extend the waivers to sell to Huawei. Furthermore, China said the United States is spreading anti-Chinese sentiment in places such as Hong Kong. Well, I guess both sides have figured out that they can never have too much goodwill ahead of the October talks.

S&P 500 and NASDAQ: The NASDAQ and the S&P 500 look weaker, particularly the NASDAQ, as both sport upward pointing wedges that started in early 2019. Both also tested higher over the past three weeks and failed three times, if you count a half-hearted effort on Tuesday. Both have cracked the bottom of the wedge. As a refresher, stocks tend to break in the opposite direction of the point of the wedge.

NOTE: The figures and information above are from the 9/26 report.

Watch Market Overview Video

NOTE: The video is from the 9/25 report.

2. Targets Hit

Here is one completed trade from Investment House Daily, offering insights into our trading strategy and the target that we have hit this week:

Pinterest Inc. (NYSE:PINS): Many of the initial public offering (IPO) darlings from the summer are getting scorned now. However, Pinterest Inc. is a stock that made us great upside gains from late July to August. Then, it peaked and failed a test of near support. It quickly dropped down to and even through the 50-day moving average (MA) by early September and then rebounded to test that break. That is a bear flag, and we love to play that action if the stock starts back downwards.

We recommended a trade in the 9/13 report, started to watch the action and let the test complete. Sometimes, it takes time before this kind of stock gives up and PINS fit that description. PINS then tried one more test of the 50-day moving average, showing a doji as it tested that level on the prior Friday. From there, it dipped. On Monday, PINS hit our entry price and we bought October $29.00 put options for $2.00.

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Here is a completed trade from the Success Trading Group, offering insights into our trading strategy and the target that we hit this week:

NYSE:SNAP (Snap Inc.)

Our Success Trading Group members scored another winning trade when we closed out a position in Snap Inc. (NYSE: SNAP). We are watching several other stocks and are looking forward to trading next week.

Our Success Trading Group closed seven years with zero losses on our Main Trade Table. In fact, we closed 100% winning trades for the calendar years 2016, 2015, 2013, 2012, 2011, 2010 and 2009. We still have one open position from 2017 (all others were winners) and one trade that we opened in 2014 but was closed as a losing trade.

All of these trades are posted on our Main Trade Table for your review during your free membership trial period.

3. Pick of the Week

NASDAQ:SBUX (Starbucks–$90.07; -1.49; optionable)

EARNINGS: 10/24/2019

STATUS: While SBUX gapped to a higher high in late July, it immediately sold back and then fell into a six-week malaise. It had good earnings and then nothing. Two weeks ago, it broke the 50-day MA on big volume. For the past two weeks, it wandered laterally below the 50-day exponential moving average (EMA). We are looking for a break lower in order to move into the downside position. A move to the target will give us a gain of 90% on the October puts and a gain of 50% on the November options.

VOLUME: 11.242M Avg Volume: 6.792M

BUY POINT: $89.98 Volume=8M Target=$85.65 Stop=$91.32

POSITION: SBUX OCT 20 2019 90.00P – (-47 delta) or NOV 15 2019 90.00P – (-46 delta)



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4. Covered Call Options Play

Coherus Biosciences Inc. (NASDAQ:CHRS) — Coherus Biosciences Inc. is currently trading at $20.86. The November 16 $20.00 Calls (CHRS20191116C00020000) are trading at $2.80. That provides a return of about 14% if CHRS is above $20.00 by the expiration.

Learn more about our Covered Call Tables here!

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