Invest and Trade Profitably with Jon Johnson

Weekender for 1/30

1. Market Summary

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

Another Upside Move Flips

– Another upside move flips as stocks still cannot find traction.
– Q4 gross domestic product (GDP) growth almost hit 7%, but that is all in the past, at least for stocks.
– Stocks cannot come to grips with the Federal Open Market Committee’s (FOMC) apparent plans
– The bond curve elevates and flattens.
– The indices have not completely capitulated on a relief move, but they are hardly looking eager to do so.

Stocks were ready to try again after another failed attempt to rally. Wednesday featured a big rollover after the FOMC meeting, and stocks were attempting to put together a “day after” rally. That rally lasted for 45 minutes. Then, there was waffling for 1.75 hours. The plunge followed soon after. The Nasdaq gave up 413 points from its high to the close. The DJ30 gave up 613 points, while the PHLX Semiconductor Sector (SOX) gave up 179 points and the Russell 2000 (RUT) gave up 76 points for a 2.29% bashing.

NOTE: The figures and information above are from the 1/27 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 1/26 report.

2. Targets Hit

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

We wrapped up some downside trades this week, as the market sold again. However, we are assuming that there will be a relief rally in the near term. With regard to the downside, before the long-term downtrends of a more bearish market environment take control, you have to play them faster, capture the fear-generated drops and then be ready for when the fear subsides and stocks quickly jump.

Once stocks start exhibiting those continuing downtrend attributes, we can let the downside plays run. It is not that we didn’t take partial profits on these positions and let them break lower — we did. The situation is not like one where there is an ongoing downtrend that you can trade with the same speed that we traded the upside trends during the bull runs.

We took gains in these downside positions:

MaxLinear, Inc. (NASDAQ: MXL): 77% and 83% gains in the put options

NVIDIA Corporation (NASDAQ: NVDA): 144% gain in the put options

Tractor Supply Company (NASDAQ: TSCO): 78.5% gain in the put options

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

Halliburton Company (NYSE: HAL): It is not a secret that oil stocks are leading the market, as growth stocks have rolled over. It is also not a secret that we have played them upside, even as we played growth stocks downside to score nice gains. It goes to show that until a bear market takes over the entire market, there are upside plays that can make great money.

We played two positions on HAL, both of which were to the upside. We entered the first position when HAL broke higher from a nicely formed double-bottom-with-handle base. The stock formed a gently downward sloping handle and then the stock gapped upside on Jan. 3, rallying through the 50-day moving average (MA). Since that was our entry signal, we issued the alert to buy HAL March $23 call options for $2.30.

We entered into the second position on Jan. 24. After a great run into mid-January, HAL tested the move. It was just about a textbook test. HAL faded for three sessions and then gapped to the 20-day exponential moving average (EMA) and the prior-base high from October. During the intraday session, HAL reversed and surged. We used that reversal as the entry signal and bought HAL April $27 calls for $3.10.

HAL exploded higher during the next session and hit the target on our newly-entered second position. So, we issued an alert to sell half the position for $4.83 in order to bank a 55.8% gain. Why just half?

Well, to answer that, we need to look at the first position to understand why.

We entered the first position during a breakout on Jan. 3. As breakouts tend to do, HAL ran hard very quickly. By Jan. 6, HAL hit our initial target. We issued the alert to sell half of the position for $3.60 in order to bank a 56.5% gain.

After HAL continued upside, we already had gains in our pocket. This made it easy to let HAL run. It did. HAL ran until Jan. 13, but then it started to fade from the high. We issued an alert to sell another half of the position for $5.30 in order to bank a 130% gain. After that, HAL started to stall and set itself up for a test. With a quarter of the original position left, we decided to let it test in order to see if it would set up again.

Well, as you know with regard to the second position, it did. HAL surged back upside this past week. On Thursday, it started to stall again after a good run. This indicated the appearance of a possible test. So, we issued an alert to sell the remaining part of the position for $7.70 in order to bank a 234.7% gain.

Taking partial profits gave us the emotional strength to let a position continue to rally and to let our winners run. We still have our second position to do just the same for us.

In sum, we found a leading stock in a leading sector, and instead of a one-and-done play, we decided to use this strategy each time the stock sets up a new buy to focus on a winner. By doing so, we can leverage very handsome gains.

We also took gain in the following positions this week:

Adobe Inc. (NASDAQ: ADBE): 68% gain in the put options

Humana Inc. (NYSE: HUM): 32.7% gain in the put options

McDonald’s Corp. (NYSE: MCD): 57% gain in the put options

Silicon Laboratories Inc. (NASDAQ: SLAB): 192% in the put options

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

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

Marathon Oil Corporation (NYSE: MRO): We love textbook setups in a leading sector, and MRO was about as textbook as you get. After a breakout from a two-month base at the beginning of 2022, MRO rallied to $20. This was a good base with a nice breakout in a leading stock in a good sector.

MRO started the test that it always makes, and we were watching for an opportunity to make some more easy, solid money on the stock. MRO did a full 50-day EMA test. It is also testing the top of the prior base in the process. This is always a great place to look for a strong stock to resume its move.

On Jan. 24, MRO gapped lower, sold to tap right at the 50-day EMA and the prior high and then posted a sharp rebound back upside. After a three-session test, that action was a screaming buy signal.

Since we could not pass up such a signal, we issued an alert to buy MRO stock for $18.26. During the session, MRO continued the reverse and even surged to near the breakout high. That was our initial target.

We could have taken partial profits, but we opted to sell it all. So, we issued a sell alert for $19.13 in order to bank a 4.76% gain. Since then, MRO has started to flatten out and move laterally. So, when it puts in a short test of this last rip higher, we are ready to reload.

We also took gains this week in the following positions.

Halliburton Company (NYSE: HAL): 6% gain in the stock

Suncor Energy Inc. (NYSE: SU): 4.2% 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.

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3. Covered Call Options Play

Eagle Bulk Shipping Inc. (NASDAQ: EGLE) — Eagle Bulk Shipping Inc. is currently trading at $43.63. The March 18 $45 Calls (EGLE20220318C00045000) are trading at $1.10. That provides a return of about 9% if EGLE is above $45 by the expiration.

Learn more about our Covered Call Tables here!

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