Invest and Trade Profitably with Jon Johnson

Weekender for 1/16

1. Market Summary

Excerpted from Thursday’s paid content of Investment House Daily.

A Very Hot Producer Price Index (PPI) Shows Some Cooling as Well

– The Producer Price Index (PPI) was very hot but showed some cooling as well.
– Stocks jumped on the PPI, but then big-cap growth stocks and the S&P 500 rolled over and dived.
– The market’s indices split, but this was something we have already seen in the various sectors and the division between growth and “old school” stocks.
– Semiconductors gapped up and then reversed hard.
– There was a big Nasdaq break lower from its resistance. Even so, the Nasdaq has moved into a basing period, not a breakdown … yet.

The PPI was inside expectations, and the conventional wisdom is that expectations equals status quo, which equals the notion that all is well. With regard to Wednesday, it was. Futures were higher, the PPI came out and futures not only doubled within two minutes, but they built upon that into the open.

NOTE: The figures and information above are from the 1/13 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 1/12 report.

2. Targets Hit

Here are four completed trades from Investment House Daily, offering insights into our trading strategy and the targets that we have hit this week:

Marathon Oil Corporation (NYSE: MRO): Due to poor policies out of Washington D.C., oil stocks are surging. Product pricing is screaming, with gasoline up by 50.8% year-over-year in December. It is currently expected to average over $4/gallon in most states this year. While this is not great, what do you do? The answer is to make money off of those who are making money.

MRO set up a base from early November to late December and laterally moved in a tight range into 2022. We were ready in the event it broke higher, and sure enough, MRO started the new year by breaking upside. That was our cue, and we issued the alert to enter by buying stock for $16.74 and April $17 call options for $1.60 — you have to love those areas where option volatility is at historical levels, i.e., low.

From there, it was a cookie-cutter trajectory upward. MRO proceeded to rally to a good breakout from a good base. On Thursday, MRO rallied to a new high on the move, hit our initial target and then started to stall.

We still felt that there was room upside for these stocks, so we did not want to bank it all. Accordingly, we issued an alert to sell half of stock for $18.98 and half of the options for $2.95, banking 13% and 84% gains, respectively. We are letting the rest work, and MRO began working back upside on Friday.

We also took gains this week in the following positions:

Applied Materials, Inc. (NASDAQ: AMAT): 32.5% gain in the call options.

ConocoPhillips (NYSE: COP): 90% gain in the call options.

Kosmos Energy Ltd. (NYSE: KOS): 22.6% gain in the stock, 42.8% gain in the options.

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Here are four completed trades from Technical Trader Alert, offering insights into our trading strategy and the targets that we have hit this week:

Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM): Even with semiconductors under fire, we saw a split in the group. That is, there were some great downside plays and some great upside plays. TSM showed a great upside setup by forming a nice flag test of the Jan. 3 breakout from a 10-month trading range. After surging on the breakout, TSM faded to test the top of the old range. That had us ready to play a new break higher — if buyers came back in, they would drive it even higher.

On Tuesday, Jan. 11, the buyers did just that. TSM gapped upside and showed some staying power. So, we issued the alert to buy March $125 call options for $9.30.

TMS performed as we had calculated and rallied again on Wednesday. Then, a gap took TSM over the February 2021 peak. That took TSM past our initial target. So, we issued an alert to sell half of the options for $18.80 in order to bank a 102% gain.

Well, after pausing after the gap, TSM did not stall for the day. It started back upside and rallied even more. When it started to stall on that move, we issued a second alert to sell half the remaining options for $21.23 in order to bank a 128% gain. The logic was that, with a huge gap upside and volatility pumped up in the options, volatility would only drop if TSM did not continue upside.

So, we wanted to capture that surge in volatility. We left some to work just to see what would happen, but an average of 113% in a short period versus the risk that we could expose ourselves to if TSM were to fill some of the gap was more than enough of a reason to bank that second half.

We also took gains in the following positions this week:

Freeport-McMoRan Inc. (NYSE: FCX): 122% gain in the options.

Halliburton Company (NYSE: HAL): 130% gain in the options.

J. M. Smucker Co. (NYSE: SJM): 95% gain in the options.

Receive a risk-free trial to Technical Trader and save 50% by clicking here now!

Here are four completed trades from the Success Trading Group, offering insights into our trading strategy and the targets that we have hit this week:

Matador Resources Co. (NYSE: MTDR): The oil sector is hot and oil stocks of all sizes are setting up good bases and good tests. They are also breaking higher. MTDR is a stock we like playing, and over this past week, we saw a great setup.

MTDR is in a base that started in November. It set up a double-bottom-with-handle pattern inside of that base and broke higher to start 2022. It tested into this week. We saw a nice doji with a tail at the 50-day moving average (MA) on Monday, and that had us ready to buy.

During the next session, MTDR made the break higher. So, we issued an alert to buy the stock at $41.56. MTDR was up again on Jan. 12, and then it surged higher on Jan. 13 — but it then started to stall. That was our sell signal, and we issued the alert to sell the stock for $43.86 in order to bank a 5.5% gain.

We also took gains this week in the following positions:

Century Aluminum Co. (NASDAQ: CENX): 4.17% gain in the stock.

Lucid Group Inc. (NASDAQ: LCID): 4.34% gain in the stock.

Patterson-UTI Energy, Inc. (NASDAQ: PTEN): 4.32% gain in the stock.

Now is a good time to become a member of the Success Trading Group. The system is geared towards bringing you consistent, short-term gains of 5-10% and you can expect four to six trades every month.

To receive a risk-free trial and save 50%, click here now!

3. Covered Call Options Play

Skechers Usa Inc. (NYSE: SKX) — Skechers Usa Inc. is currently trading at $44.31. The Feb. 18 $45 Calls (SKX20220218C00045000) are trading at $2.15. That provides a return of about 7% if SKX is above $45 by the expiration.

Learn more about our Covered Call Tables here!

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