Weekender for 1/29
1. Market Summary
Market Was Able to Blow a Lead and Then Recover
- Tesla’s earnings and Chevron’s massive buyback help turn the downbeat earnings season’s start.
- Market able to blow a lead and then recover.
- Gross domestic product solid, durable transports surge, initial claims lower again.
- Afterhours earnings for semiconductors are disappointing at best.
- Market’s resilience to be tested again Friday with earnings and Personal Consumption Expenditures Price Index.
Futures were up heading into Thursday and the data. Tesla’s earnings were good enough to push it up 10.9%, while Chevron’s $75 billion stock buyback got the buyback frenzy boiling.
The morning data was stronger than expected on the headlines per gross domestic product, durables, Initial claims. Surprisingly, that did not sink futures. They kept gaining into the open. Then the bell rang and they fell. A very choppy morning followed. All indices but the Nasdaq and Nasdaq 100 turned negative. Once again, however, the bids returned and pushed stocks higher into the close, turning downside into very decent gains. Yet, once again stocks shook off the downside and rallied. The rally resilience is impressive, prompting even Goldman Sachs to note the same.
NOTE: The figures and information above are from the 1/26 report.
Watch the Investment House Videos For This Week Here!
NOTE: The videos are from the 1/25 report.
2. Targets Hit
Investment House Daily:
The rally off the October low has some convinced that the market has bottomed. Perhaps it has. Likely not, but perhaps. In any event, the patterns are what drives our decisions, and there are good patterns in growth. semiconductors, net services and software — good, old-fashioned tech. Thus, when stocks such as Shopify Inc. (NYSE: SHOP), having suffered a long decline due to post-pandemic overspending, started to turn the corner upside after forming good patterns, we were on it. Same with some “name” semiconductors such as NVIDIA Corporation (NASDAQ: NVDA) and Rambus Inc. (NASDAQ: RMBS). We are not sure how long this move will last, but as long as the patterns set up and give us good entries to play, we will do just that.
Following the growth patterns, we took gain in the following positions:
NVIDIA Corporation (NASDAQ: NVDA): 50.9% gain in the options.
Rambus Inc. (NASDAQ: RMBS): 70.9% gain in the options.
Shopify Inc. (NYSE: SHOP): 78% gain in the options.
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Technical Trader Alert:
The cool thing about this market is that several different areas are working. Money is moving into growth, but it is also moving into what I call the “hard” sectors, i.e. metals, materials, minerals and energy. Sure, they don’t always just surge up together in one big happy family; metals will pause while techs surge one day.
Overall, however, they are moving up as a group, and that shows us that new money is coming into the market and driving up many sectors, versus moving from one sector to another, pulling the money out of a sector and letting it fall while they run after the next. Another thing this shows us is this early 2023 rally is stronger than many anticipated, and they are being convinced to put more and more money to work chasing the upside. Thus far, that is having a very synergistic effect for the upside in several sectors.
We are, of course, playing this move, and we continue to play various sectors versus just one because the plays from various sectors are yielding strong gains. It is not just one sector returning big gains while others scratch out modest moves. Accordingly, we have several plays rallying well, and we are banking gains in them as they make the anticipated moves, taking partial profits to let positions run in this pleasantly surprising broader run.
This week we banked gains in the following positions:
Louisiana-Pacific Corp. (NYSE: LPX): 70.9% in the options.
Qorvo Inc. (NASDAQ: QRVO): 71% gain in the options.
Steel Dynamics, Inc. (NASDAQ: STLD): 102% in the options.
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Rapid Profits Alert:
Core Laboratories N.V. (NYSE: CLB): The oil sector has come back around as we anticipated, and thus when the breaks higher started, we were looking for rapid opportunities. The services sector is a solid group within the group we were watching, and thus, when CLB broke higher over the 200-day simple moving average (SMA), we saw the opportunity for a rapid advance on that strong move.
On the gap over the 200-day SMA, CLB closed with a doji. The next session, it started higher once more, showing the momentum was still present. We issued the alert to buy the stock that was trading at $22.73 on the ask side.
From there, CLB trended steadily up the 10-day exponential moving average (EMA) — a slow but steady move for a week. It tested the 10-day EMA then started to move up the 10-day EMA again. On Wednesday, CLB jumped up from a 10-day EMA test, hitting our target as it hit a gap zone from back in June.
We issued the alert to sell with the stock trading $25.12 on the bid side, giving us a solid 10.5% gain.
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3. Covered Call Options Play
Abercrombie & Fitch Co. (NYSE: ANF) — Abercrombie & Fitch Co. is currently trading at $27.84. The March 17 $28 Calls (ANF20230317C00028000) are trading at $2.20. That provides a return of about 10% if ANF is above $28 by the expiration.
