Invest and Trade Profitably with Jon Johnson

Weekender for 11/14

1. Market Summary

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

Stocks Jump Back

– Stocks jump back — some of them — with chips in the lead. Others are up, but they are not convincing.
– It was Veterans Day, so there was a slower newsfeed and lower volume.
– Gold and silver rally again, as the dollar is moving higher. Worries about central bank mistakes and financial upheaval are becoming common.
– Perhaps another couple of sessions of tests would be best, but we anticipate that stocks are going to start higher from some groups before the overall market, just like what the chips are doing.

On Wednesday, I noted that after the drop during the session that had the indices mostly testing the 10-day exponential moving average (EMA), it might be that the bids just could not wait to return. The inflation surges and declining real wages woke President Biden up, and he gave the usual politician “heads will roll” commentary. He also promised to get to the bottom of the cause of the price spikes — as he literally readied himself to sign an order closing yet another pipeline feeding energy to the Midwest. When I drop a hammer, it falls and hits my big toe. Thus, I can blame gravity. However, when I close hundreds of petroleum pipelines and spurs, there is no effect on energy availability or cost. This makes sense, right?

With the administration’s team on the problem, investors were relieved and started buying stocks. The difference in this session from the other upside sessions on this run was that the premarket was a gap-and-sit pattern. On the other hand, the previous ones were low-to-high moves. That was noted in the premarket alert as a possible issue, and it was.

While the market did not collapse, the highs for half of the indices were hit when the markets opened, as the regular session action matched the premarket action with a lateral range for most of the session.

NOTE: The figures and information above are from the 11/11 report.

Watch the Investment House Video For This Week Here!

NOTE: The video is from the 11/10 report.

2. Targets Hit

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

Vulcan Materials Company (NYSE: VMC): Sometimes, a focus on the glamor of tech investors and traders causes one to lose sight of the areas that are overlooked, including areas where option volatility and values are not inflated. Frankly, those are the areas we love because we can make so much more money there, as the stocks make the moves that we had anticipated, causing option values to surge. This means looking at the materials, the metals and the “boring” areas.

VMC fits the bill, even though it was somewhat forgotten. This was because it sold back from late August into September and early October. Yes, but we started noting the holds near the 200-day simple moving average (SMA) and the series of higher lows below the 50-day moving average (MA) forming a triangle at the bottom of the pullback.

Think of that pattern as a watermelon seed between your fingers — as you squeeze the seed between your fingers with increasing force, the watermelon seed then shoots out. We saw this, we put VMC on the report and we waited for the seed to squirt.

That happened on Oct. 20. VMC squirted over the 50-day SMA. So, we issued an alert to buy December $180 call options for $8.15. By Oct. 25, VMC had approached the highs before the selloff and hit our initial target. We issued an alert to sell half of the position for $13.80 in order to bank a 69% gain.

As is often the case after an initial break, VMC tested for a couple of sessions and fell to the 10-day EMA. That reset the move, and VMC resumed the breakout climb. On Nov. 2, VMC broke over the prior highs. It made a quick test during the next two sessions, rallied modestly during the next and then gapped sharply higher.

The opening price was just about the high for the day, as VMC then stalled. It sold back and then rebounded, but the action left it with a hangman doji.

We issued an alert to sell the rest of the position for $22.40 in order to bank a 174.8% gain. VMC has faded back to the 10-day EMA as of Friday, and we are looking at it as another potential play.

We also took profits in the following positions over the past week:

Albemarle Corporation (NYSE: ALB): 138% gain in the options

Advanced Micro Devices, Inc. (NASDAQ: AMD): 438% gain in one option play, 193% gain in the other option play, Inc. (NASDAQ: AMZN): 62% gain in the options

Brooks Automation, Inc. (NASDAQ: BRKS): 87% gain in the options

Coinbase Global Inc. (NASDAQ: COIN): 116% gain in the options

F5 Networks, Inc. (NASDAQ: FFIV): 45% gain in the options

Marvell Technology Inc. (NASDAQ: MRVL): 119% gain in the options

New Relic Inc. (NYSE: NEWR): 469% gain in the options

Zeta Global Holdings Corp (NYSE: ZETA): 25.8% gain in the stock

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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:

Nordstrom, Inc. (NYSE: JWN): Seriously, Nordstrom? Malls are dead, right? Maybe, but that does not mean we aren’t watching for opportunities everywhere.

We saw the retailers bottoming and starting to move. Even with supply chain problems creating shortages, the seasonal move in retailers has started. We saw JWN set up a double-bottom-with-handle pattern from late August to late October and put the ticker on the report.

Then, when JWN broke higher, we issued an alert to buy December $30 call options for $2.45. JWN continued to move higher into Nov. 5 and hit our initial target. As a result, we issued an alert to sell half of the position at a price of $4.45. This generated an 81% gain.

JWN continued upward to the 200-day SMA. So, we issued another alert to sell half of the remaining position for $5.00 in order to bank a 104% gain.

With regard to the last part of the position, we are waiting to see if JWN can sustain a break through the 200-day SMA and continue to rally.

We also took gains in the following positions over the past week:

Broadcom Inc. (NASDAQ: AVGO): 70% gain in the options

Coinbase Global Inc. (NASDAQ: COIN): 66% gain in the options

Eaton Corporation PLC (NYSE: ETN): 116% gain in the options

Royal Caribbean Cruises Ltd. (NYSE: RCL): 122% gain in the options

Reliance Steel & Aluminum Co. (NYSE: RS): 107% gain in the options

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

Lucid Group Inc. (NASDAQ: LCID): We love new issues, because when they move, they move with vigor. We saw LCID break out on Friday and Monday and then test from Tuesday to Wednesday.

On Wednesday, it tapped the 10-day EMA and started to rebound. As this was a great breakout and a nice test, we issued an alert to enter LCID by buying the stock for $40.84.

LCID held over the 10-day EMA to close the session. Then, LCID charged higher, gapped upside and rallied. LCID hit our target in the early afternoon. So, we issued an alert to sell the stock for $43.30. This produced a nice, solid 6% gain overnight.

We also took a gain in the following position this week:

Freeport-McMoRan Inc. (NYSE: FCX): 4.04% 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

Riot Blockchain Inc. (NASDAQ: RIOT) — Riot Blockchain Inc. is currently trading at $39.53. The Dec. 17 $40 Calls (RIOT20211217C00040000) are trading at $7.10. That provides a return of about 24% if RIOT is above $40 by the expiration.

Learn more about our Covered Call Tables here!

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