Weekender for 10/29
1. Market Summary
- Big tech plays catch down to the rest of the market as the Nasdaq breaks the 200-day simple moving average (SMA).
- Small-caps, mid-caps bounce after their thrashing.
- Q3 gross domestic product (GDP) at 4.9% with boosts yields, but a strong seven-year auction brings them back down — someone was sent in to buy.
- The number of leadership caliber patterns declines instead of improving
- Cathartic bottom versus Soviet collapse bottom: neither showing up thus far.
NOTE: The figures and information above are from the 10/25 report.
MARKET VIDEO
NOTE: The videos are from the 10/24 report.
2. Targets Hit
Technical Trader:
Microsoft Corp. (NASDAQ: MSFT): MSFT, of course, is one of the mega-cap techs we keep on one of our watchlists, and thus we saw the double-bottom pattern building from the beak in July into October. Classic action in the pattern with a lower low at the 180-day moving average (MA) in late September as moving average convergence divergence (MACD) put in a higher low — the pattern forming up and MACD showing upside momentum building.
Early October, MSFT was approaching the 50-day MAs, and it was also approaching earnings on Oct. 24. On Oct. 6 MSFT just cracked though the 50-day MAs. A good move higher, a good pattern, breaking resistance. It looked as if MSFT was setting itself for a nice run towards earnings. As it was Friday, and MSFT was just slightly breaking the resistance, we decided to wait until Monday to see if it could sustain that break.
Monday came and MSFT continued upside. We issued the text and email alert to enter December $330 call options trading on the ask at $15.58.
MSFT continued higher that session and added even more upside the next several sessions. Not blowing it out, however, just steady. Then, MSFT stalled. It did not sell, just did not advance, working laterally over the 50-day MAs.
We recognized this action as a forming a handle to the double-bottom pattern. A nice pattern to buy, but it might not give us a breakout before earnings. That left us with the decision to exit pre-earnings or hold through the results. MSFT is one if the first big “names” to announce, and often the first announcers enjoy some leeway. Thus we decided to hold into the results.
Well, you know what happened. MSFT beat expectations handily and gapped upside on Oct. 25. It came close to our initial target then started to stall so we issued the alert to sell options that were trading at $22.50 on the bid, a solid 44% gain on the move.
Receive a risk-free trial to Technical Trader and save 50% by clicking here now!
3. Covered Call Options Play
Rcm Technologies Inc. (NASDAQ: RCMT) — Rcm Technologies Inc. is currently trading at $19.50. The Nov. 17 $20 calls (RCMT20231117C00020000) are currently trading at $0.80. That provides a return of about 9% if RCMT is above $20 by the expiration.
