Weekender for 10/1
1. Market Summary
- Weaker data appear to rattle stocks, but follow-through to Wednesday’s reversal finally shows up.
- Pending homes plummet, GDP Q2 consumption posts a nine-sigma miss
- Bank of America reports consumer spending -0.3% the prior week
- Suddenly, the media picks up on the weaker consumer as sentiment turns very negative.
- PHLX Semiconductor Sector (SOX) leads the bounce after showing the best setup the past week.
- Personal income and spending, Personal Consumption Expenditures (PCE) out before the bell.
- A relief move until otherwise proven (and it is just one session upside).
Wednesday showed a big reversal off the lows, and perhaps the stock indices were making the rebound move. Then the Thursday pre-market was down. Tried higher, but faded post-data to a negative open. From that lower, open, however, the bids returned and stocks rallied nicely positive to late morning. A three-hour lateral move, then a surge higher to start the last hour. Solid.
The market, however, found another way to sully the action as it dropped fast in the last half hour, giving back that run higher the first half of the final hour. Even so, some solid moves transpired, particularly SOX and its 1.77% gain — important market leader and as noted Wednesday, the pattern suggested a bounce. Well, okay then, it did bounce for the day, way out in front of the large-cap indices and followed more closely by the transports as well as the mid-caps.
NOTE: The figures and information above are from the 9/28 report.
MARKET VIDEOS
MARKET SUMMARY
TECHNICAL SUMMARY/NEXT SESSION
NOTE: The videos are from the 9/27 report.
2. Targets Hit
Investment House Daily:
With the market finally starting to sell into September, there were some opportunities to make money, but we also figured the market had one more relief bounce in it before further downside — or just maybe that would be it for the downside and the year-end rally would start early. After all, 2023 is a strong year, and in strong years the market can skip September selling and still post a solid Q4 rally.
Thus, we were looking at some downside plays to make us some money — September downside can be big and there are gaps to fill. If the selling turned aggressive, then these plays could post impressive gains. If not, we could make some short-term money during some selling the market was primed to deliver. As it turned out, the market sold but then started to show signs of a bounce as the week progressed. Thus we banked the gains and will now wait and see if the market rolls back over for one more selloff to set the rally.
Ingersoll Rand Inc. (NYSE: IR): 30% gain in the put options.
Nucor Corporation (NYSE: NUE): 38.5% gain in the put options.
Direxion Daily Semiconductor Bear 3X Shares (NYSEARCA:SOXS): 38.5% gain in the call options.
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Technical Trader:
Leadership has definitely narrowed and thus the upside opportunities were quite limited outside of oil and gas and perhaps some minerals and software. The market could definitely sell hard, given the gaps on the move higher from late spring and the summer, but we also know the year is a strong one and the Fed is continuing to add off the books liquidity through its Bank Term Funding Program (BTFP) emergency facility that it started way back in March — still an emergency?
Emergency or not, banks are still lining up at the money bank to get their money to invest in the financial markets in order to offset their losses from all those investments structured on a low to no interest rate environment.
Given this scenario, we entered several downside plays and continued letting our oil and gas plays work. We banked some solid gains on the week.
Netflix Inc. (NASDAQ: NFLX): 34% gain in the put options.
Oceaneering International Inc. (NYSE: OII): 226% gain in the call options.
ProShares UltraShort S&P500 (NYSEARCA: SDS): 100% gain in the call options.
Workday Inc. (NASDAQ: WDAY): 83% gain in the put options.
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Rapid Profits Stock Trader:
The market was showing downside volatility as the September selling took hold, but the leaders still performed in oil and gas, minerals and other ‘hard stuff,’ and we were able to convert this continued buying into some solid short-term gains on the stock.
Peabody Energy Corp. (NYSE: BTU): 8.7% gain in the stock holding less than four sessions.
Oceaneering International Inc. (NYSE: OII): 9% gain in the stock holding less than three sessions.
Uranium Energy Corp. (NYSEAMERICAN: UEC): 8.17% gain in the stock holding a week.
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3. Covered Call Options Play
Green Brick Partners Inc. (NYSE: GRBK) — Green Brick Partners Inc. is currently trading at $42.44. The Oct. 20 $45 calls (GRBK20231117C00045000) are currently trading at $2.05. That provides a return of about 12% if GRBK is above $45 by the expiration.
