Weekender for 10/17
1. Market Summary
Excerpted from Thursday’s paid content of Investment House Daily by Jon Johnson.
Sellers Left and Stocks Jumped
– The sellers left and stocks jumped. Higher prices were no impediment.
– Lower bond yields are a positive for tech stocks and small-cap stocks, but is this really a situation where it is good to see falling interest rates?
– There are no chips and no other materials. Those that are available are surging in price. For how long will the boom last?
– The Nasdaq and some big Nasdaq names break higher from a short inverted head-and-shoulders pattern. The S&P 500 has done the same thing. This seasonal move has decided to avoid the Christmas rush and skip another downside move.
Prices are higher, bond yields are lower and stocks have surged. The seasonal move lower was shelved, likely for good, on Thursday. Meanwhile, stocks gapped higher on more solid bank earnings. The logic we heard is that if the banks are making money, then the economy must be great.
Once upon a time, that was perhaps true. That was back when banks loaned money as the primary way to make money. Right now, none of the big banks whose earnings we saw over the past two days loan money, or at least, not to anyone or anything that is not a huge entity. Loss reserve releases, trading and money management for the top 1% dominate their gains. So, are big bank earnings necessarily indicative of a surging economy? No.
That aside, the market participants did not care. Stock futures gapped higher, rallied during the premarket session and then rallied during the entire session. All kinds of stocks rallied big and gapped higher.
NOTE: The figures and information above are from the 10/14 report.
Watch the Investment House Videos For This Week Here!
NOTE: The videos are from the 10/13 report.
2. Targets Hit
Here are two completed trades from Investment House Daily, offering insights into our trading strategy and the targets that we have hit this week:
Schlumberger NV (NYSE: SLB): The oil and gas sector is solid, and SLB was putting the end touches on a bottom in late September. We were watching for a break higher, and when SLB showed signs of doing so, we put the play on the report. On Sept. 27, SLB posted a strong move, which was our signal to enter. We bought November $30 call options for $2.20.
SLB rallied and then tested the 10-day exponential moving average (EMA). It then rallied and tested the 10-day EMA once more. Then, SLB broke higher again and rallied on into Monday. That move took SLB to our initial target, and we sold half of the options for $3.55. This allowed us to bank a 61% gain.
SLB has continued upside, and on Oct. 15, it gapped to a doji. After this move, we sold another half of the options for $4.20 in order to bank a 90% gain.
We also banked a gain this week in the following position:
JPMorgan Chase & Co. (NYSE: JPM): We banked the rest of the 63.9% option gain.
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Here are several completed trades from Technical Trader Alert, offering insights into our trading strategy and the targets that we have hit this week:
Genesis Energy, L.P. (NYSE: GEL): This stock was in the right sector and had both the right pattern and the right numbers. GEL is in the energy sector, and the stock put in a very nice rounded bottom from early August to late September. All it needed to show us was a strong break higher.
GEL was below the 200-day simple moving average (SMA), but it moved up to that resistance during the second half of September. It then faded, rebounded back to that level and then slid laterally.
On Sept. 27, GEL broke higher. Then, it paused and started back upside on Sept. 29. At that time, we moved in and bought December $10 call options for $0.65.
GEL then put in a solid, steady climb up the 10-day EMA. By Monday, Oct. 11, GEL hit our initial target at the early July peak. As a result, we sold half of our options for $2.00 and banked a 207% gain.
We also took gains in the following positions this week:
American Superconductor Corporation (NASDAQ: AMSC): 78% gain in the options at the initial target.
Salesforce Inc. (NYSE: CRM): 42% gain in the options at the initial target.
Halliburton Company (NYSE: HAL): 49% gain in the options at the initial target.
HollyFrontier Corp. (NYSE: HFC): 48% gain in the options at the initial target.
Synopsys, Inc. (NASDAQ: SNPS): 79% gain in the options to close the position.
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Here are three completed trades from the Success Trading Group , offering insights into our trading strategy and the targets that we have hit this week:
Certara Inc. (NASDAQ: CERT): This excellent pattern from a relative recent issue caught our eye in early October. CERT posted a good rally in August, its first one since going public, and it was putting in a very solid test of the 50-day moving average (MA) into early October. As it had a nice breakout and great test of its key support, the setup was there to make some money on the rebound.
On Oct. 12, CERT did just that, as it rallied up from the 50-day MA. We bought the stock for $35.16. During the next session, CERT continued higher. So, we sold the position for $36.58 and banked a 3.98% gain.
We also banked gain last week on the following positions:
Oil States International, Inc. (NYSE: OIS): 4.63% gain in the stock.
Plains All American Pipeline, L.P. (NASDAQ: PAA): 4.55% 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. Pick of the Week
ETN (Eaton Corp. — $153.39, +1.76)
EARNINGS: 11/02/2021
STATUS: After a peak and drop from early September to October, which was part of the move that made us money on the downside, ETN is trying to hold the line and rebound. It sold down to its key support last week, but held on as it slid laterally. It gapped higher last Thursday, and spent the past four sessions testing that move. Thus, it formed what looks to be the right shoulder to a four week inverted-head-and-shoulders pattern. We want to play a strong break higher for a run at the 50-day SMA. That move will give us a 60% gain in the options.
VOLUME: 1.404M Avg. Volume: 1.632M
ENTRY POINT: $154.47 Volume=2.2M Target=$159.68 Stop=$152.79
POSITION: ETN NOV 19 2021 $155 Calls — (45 DELTA)
To see the chart for ETN, click here!
4. Covered Call Options Play
Avid Technology Inc. (NASDAQ: AVID) — Avid Technology Inc. is currently trading at $29.96. The Nov. 19 $30 Calls (AVID20211119C00030000) are trading at $1.30. That provides a return of about 11% if AVID is above $30 by the expiration.
