1. Market Summary
Excerpted from Thursday’s paid content of Investment House Daily by Jon Johnson.
Chips Lead Again
– Chips lead again, but some big names on the Nasdaq have started to surge.
– There have been new highs on the PHLX Semiconductor Sector (SOX), Nasdaq 100 and the S&P 500.
– Many groups still look good enough to rally and broaden the move, but they are not doing so yet.
– When we were on the cusp of November options expirations, the market was already volatile.
– We took what the market gave, and we accepted that it could have been just the large-cap stocks.
Wednesday was an off session. So, in this up-a-day, down-a-day pattern, Thursday marked a move to the upside. This was true for the leading indices — the SOX, Nasdaq , Nasdaq 100 and the S&P 500 (kind of). They put in new, all-time highs and the SOX gapped to a new high. Meanwhile, the Nasdaq 100 and the S&P 500 hit new highs, but barely.
The other indices were down, but they were not bad. They reached lower and then recovered to form dojis with tails. This meant that they reversed off of the lows after several sessions lower. This set up a potential bounce for these lagging indices. We also cannot forget rotation. It has disappeared for a bit, but the setups in the laggard indices suggest that it is going to return.
Remember, I was talking about the Nasdaq big names joining the move, giving it a jolt upside. Indeed, Apple posted a second strong day as it surged. Amazon surged and blew through the upper gap point from late July. Google, Nvidia and Microsoft broke to new closing highs, even though the moves were not as powerful as those of Apple or Amazon. They were enough to break the Nasdaq 100 to a new high, but again, if the other big Nasdaq names start to really rally, the move will be impressive.
NOTE: The figures and information above are from the 11/18 report.
NOTE: The videos are from the 11/17 report.
2. Targets Hit
Here are four completed trades from Investment House Daily, offering insights into our trading strategy and the targets that we have hit this week:
Lucid Group Inc. (NASDAQ: LCID): Hot momentum areas can produce opportunities. In fact, they can produce frequent opportunities. LCID is a relatively new issue (its initial public offering was in 2020), and after a torrid run to start 2021, its batteries needed a major recharge.
LCID spent a period from the second half of February into October forming a big-cup base. We wish we had caught it as it finished its base, but as I said, this kind of stock provides frequent opportunities.
We saw that when LCID tested the late October surge higher. This cleared the interim recovery highs in the long base. On breakout tests, we often find opportunities. So, when LCID tested the 10-day exponential moving average (EMA) during the second week of November, we put it on the report and were ready to play the next move higher.
On Nov. 11, LCID initiated the next move with a gap up from the 10-day EMA. This was our entry signal, and we issued an alert to enter the play by buying December $42 call options for $7.40. LCID moved laterally for the next two sessions and then gapped upside on Nov. 16, finally filling that February 2021 downside gap.
Since that was our initial target, we issued an alert to sell the options for $14.30 in order to bank a solid 93% gain. LCID fell back on Wednesday and Thursday, but it is starting to move back upside. So, we may get another one of those frequent opportunities yet again.
We also took the following gains during the past week:
Advanced Micro Devices, Inc. (NASDAQ: AMD): 63% gain in the options
Amazon.com, Inc. (NASDAQ: AMZN): 77% gain in the options
F5 Inc. (NASDAQ: FFIV): 137% gain in the options
Here are five completed trades from Technical Trader Alert, offering insights into our trading strategy and the targets that we have hit this week:
Apple Inc. (NASDAQ: AAPL): It seems almost trite, but when a big name sets up a good pattern, it pays, literally, to take notice and act. AAPL did that from September to early November. This is was when it formed a nice cup-with-handle base around the 50-day moving average (MA) and then threw in an inverted head-and-shoulders pattern at the bottom.
Was this a good pattern? For sure.
AAPL tried to break out just before the end of October, but it fell back to the 50-day MA. It bounced, and the fact it did not sell off showed that the sellers tried, but failed, to act.
This meant that when AAPL made the break higher on Nov. 2, we were ready. We issued an alert to enter the play by buying January $150 call options for $6.50 — this is what a “forgotten,” and somewhat dormant, stock will do for you: better options pricing.
AAPL rallied off of the 50-day MA for a week, but then tested back to that level during the second week of November. During the prior Friday, however, AAPL started upside.
It continued higher and then surged on Wednesday and Thursday, taking out the early September prior high that had started the base. That was the initial target, and we issued the alert to take half the gains by selling half of the options for $11.50. This allowed us to bank a 76% gain.
We also banked gains in the following positions this week:
Amazon.com, Inc. (NASDAQ: AMZN): 42% gain in the options
Broadcom Inc. (NASDAQ: AVGO): 85% gain in the options
Nordstrom, Inc. (NYSE: JWN): 109% gain in the options
Shopify Inc. (NYSE: SHOP): 88% gain in the options
There were no new trades in the Success Trading Group this week.
Still, 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.
3. Covered Call Options Play
Babcock & Wilcox Enterprises Inc. (NYSE: BW) — Babcock & Wilcox Enterprises Inc. is currently trading at $9.86. The Dec. 17 $10 Calls (BW20211217C00010000) are trading at $0.50. That provides a return of about 8% if BW is above $10 by the expiration.