1. Market Summary
Stocks Hold the Wednesday Surge Higher
I don’t know about you, but I was damn interested in learning just what the government says about manufacturing jobs for November in Friday morning’s jobs report. Why? Outside of concern for those in manufacturing, the economic news on Thursday was rather atrocious on top of other rather atrocious data.
Yes, yes, the Personal Consumption Index (PCI) rose 0.3% as it did in September (6.0% vs 6.3% prior) and core PCE fell to 0.2 from 0.5 (5.0% annually vs 5.2% prior). Good to see inflation falling in some areas. It is still, however, well over 7% that is admitted to. When you look at the other data diving lower, it is 2+2 remedial math to get to stagnation plus inflation equal stagflation on the way.
NOTE: The figures and information above are from the 12/1 report.
NOTE: The videos are from the 11/30 report.
2. Targets Hit
General Mills, Inc. (NYSE: GIS): Breakfast cereal? I used to eat this reconstituted sugar and cellulose when I was young; amazing we made it to adulthood. But, I digress. The quality has improved over the decades (though some would debate that), and frankly, I am not in this to get my Kix (get it?).
Accordingly, when I saw GIS testing the 20-day exponential moving average (EMA) after a nice new break higher off a 50-day moving average (MA) test, I was ready to make some money in Investment House Daily. The stock bounced nicely, volume looked decent, so we issued the alert to buy the January $80 calls asking for $3.83.
The next session KIX jumped higher with nice gap. Then it dropped. CPI came out the next session, and while the market screamed higher on the news, GIS fell — food is something of a fear trade, and when everything turned up rosy with CPI not as scorching hot, surely all is well.
Fortunately, it was a kneejerk move. GIS traded to the 50-day MA, held there for two days, then gapped back over them. From there, it was almost straight up. For seven consecutive sessions, GIS gained, then took a two-session pause. Wednesday, GIS screamed higher, adding more upside Thursday, tripping our initial target.
The stock hit near 87 then started to wobble. Strong three-weeks upside, big surge, hitting the initial target — good time to take some gain. We issued the alert to sell half the options that were bidding for $7.00, a solid 82% gain. Now, we will see if GIS continues moving up the 10-day EMA with periodic tests and turns that 80% solid gain into seriously great gains.
HF Sinclair Corp. (NYSE: DINO): DINO is a play we discussed before back on Nov. 4, when it hit our second target. We picked up the play on DINO in Technical Trader Alert on Sept. 30, when it moved up from a break below the 50-day MA that then reversed upside — the sellers tried to take it down but failed as the buyers swarmed back in. That is a powerful upside signal.
After that bounce from the 50-day MA, DINO started a steady rally up the 10-day and 20-day EMAs. A strong stock will come up off the 50-day MA and use the 10-day and 20-day EMAs as support for periodic tests as it rallies higher. Typically, a stock will show four to five such bounces up from tests of the 10-day and 20-day EMAs before needing to test back to the 50-day MA. At that point, you see if the move repeats or if it needs a deeper test to base.
Over the course of October through November, DINO rallied, using the 10-day and 20-day EMAs combination as support five times, the last one coming late November. Along the way, we took gains on Oct. 27 (55%) and again on Nov. 4 (82%) when DINO rallied to near $65.
DINO tested back to the 20 day EMA after that move and then rallied again, clearing $65 but not by much before testing. Again DINO tested the 20 day MA and rebounded, moving again to a higher high. Once more, however, DINO’s new high was nominal. It held the 10-day MA, it then tested the 20-day MA, showing a doji — a good bounce potential off that signal. DINO did indeed bounce on Nov. 29, posting a nice move. The rally, however faltered intraday and DINO started down. We issued the alert to sell the last quarter of the position, banking 55%.
Sure enough, DINO then fell to the 50-day MA over the next few days. On Friday, it broke the 50-day MA; looks as if DINO will need to test lower and base before it is ready to rally again. Was this the optimal gain for us? Well, that last quarter could have made us a bit more money: after five rotations when the stock threw a doji at the new high on Nov. 25, we could have made 65+%. After that many moves, that was the smarter play, but once it was clear the bounce had lost its strength we still made a good trade, just not the optimal one on that last part of the position.
Companhia Siderurgica Nacional SA (NYSE: SID): We are always looking for opportunities in stocks that are “turning the corner,” that is, coming off long declines with bases. SID built a pattern from September into November. A big break higher the first week of November cleared the 50-day MA and put SID back on the radar. It tested the 50-day MA, and when it started to break higher again, that was our entry signal.
We issued the alert to buy SID on Nov. 11, when it was asking at $3.05. Nice strong break higher and SID continued upside for two sessions. Nice, but then SID rusted out and fell back to test that break over the 50 day MA again. That tested the resolve, but support held and then SID started back upside.
SID moved higher into Wednesday of this week, filling the gap we were looking at as our target. Nice strong move and we contemplated letting it run farther. We opted to play the plan and issued the alert to sell with the stock bidding $3.05, banking just over 10%. The next session, SID gapped down to the 20-day EMA near $2.80 — it can be volatile, but now we look for a new opportunity.
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3. Covered Call Options Play
Futu Holdings Ltd. (NASDAQ: FUTU) — Futu Holdings Ltd. is currently trading at $42.11. The Dec. 16 $43 Calls (FUTU20221200C00043000) are trading at $3.85. That provides a return of about 13% if FUTU is above $43 by the expiration.