Weekender for 10/15
1. Market Summary
- Stocks rattled by hotter Consumer Price Index (CPI), recover from it, move higher.
- Market recovery chop-blocked by a terrible 30-year auction.
- Late rebound makes things a bit better looking at the close.
- Small-caps, mid-caps slaughtered as the economics at home look depressing.
- Same leadership groups hold up well enough as the market continues using this action to build patterns.
- After all the back and forth, I still believe this action is just part of the setting the stage for the next leg higher in a Q4 rally.
Thursday, stocks did a very good job of surviving a hotter than expected CPI. It was just the headline, however, though it was hotter both month/month and year over year. But, we all know the headline doesn’t count, right? Core was in line and core year/year fell to 4.1% from 4.3%. Giddy up.
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NOTE: The figures and information above are from the 10/12 report.
MARKET VIDEOS
MARKET SUMMARY
TECHNICAL SUMMARY/NEXT SESSION
NOTE: The videos are from the 10/11 report.
2. Targets Hit
Rapid Profits Stock Trader:
United States Steel Corporation (NYSE: X): Sometimes boring can be a nice reprieve in a volatile market. Sometimes. We did not enter this trade, however, with boredom as a criteria. X gapped higher on Aug. 14 on much better-than-expected earnings. It was a strong gap, but it took X right up to the March high that started the base — not a breakaway gap, so we were not ready to jump all over this for more upside as you would with a breakaway type. We watched to see if the gap would try to fill or if X held the gap and then started higher.
We watched and watched and watched. X did not fill, it just moved laterally. Finished August. Started September. Continued moving laterally in a tight range. Then, the third week in the month, X moved higher, testing the old high and the gap highs. It faded for two days but held a higher low at the 10-day exponential moving average (EMA).
Okay, if X made the breakout from here, that indicated X was going to continue upside. It tried that break, made it intraday, but faded in that test. On Sept. 22, however, X made the breakout move again, and this time it held. That was our entry signal and we issued the alert to buy the stock trading at $31.92 on the ask. Our target was $34.40, not that far off for a stock that posted such a nice surge on earnings. So, we settled back and let the move happen.
X did move, working steadily up the 10 day EMA. But as with the lateral move, it was glacial pace. Up a couple of days, test a couple of days, up a couple of days, test a day … a rather monotonous move. It did, however, continue that move. One week. Two weeks. Three weeks. This week was week number four. All holding the 10-day EMA. After that number of weeks, no matter how steady, a trader knows a stock is due a test to reset.
After a good upside move Wednesday and a bit more added Thursday — in an up and down session — we saw Friday start soft when the market was higher in nearly all areas. That was enough of a signal so we opted to sell half the position. We issued the alert to sell half the position with the stock bidding $33.54.
That banked just over 5% for us. Not the 7+% of our original target, but solid enough with the risk of a test growing. Now we see if the remainder of the position holds near support and continues the steady climb higher to the $34.40 level. Boring? Making money is never boring.
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3. Covered Call Options Play
The Bancorp Inc. (NASDAQ: TBBK) — The Bancorp Inc. is currently trading at $34.66. The Nov. 17 $35 calls (TBBK20231117C00035000) are currently trading at $1.65. That provides a return of about 7% if TBBK is above $35 by the expiration.
