1. Market Summary
Excerpted from Thursday’s paid content of Investment House Daily.
The Stock Rebound Holds
– This time, the stock rebound holds, but only after the failed bounces had led to an oversold condition.
– The market has many things to deal with, the biggest of which are a Fed that has been forced into a situation where it has to raise interest rates and lower liquidity. It is like what happened in 2000, but for different reasons.
– The bounce was decent enough, and there are some excellent upside leadership setups. However, the market is dealing with some significant damage, which is trying to upend any further end-of-the-year rallies.
– We are watching the quality of the bounce — a process that could take a couple of weeks.
It was Thursday so… stocks rallied. They opened lower and reversed upside last Wednesday, right before Thanksgiving. They dove lower on Friday on news regarding the Omicron variant and its “very, very mild” symptoms and then gapped upside on Monday. Stocks were down on Tuesday, up then down on Wednesday, and back upside on Thursday. At this point, the Nasdaq even pulled a negative-to-positive move just in time for the November Jobs Report. Talk about a tennis match! With the Friday jobs, there was the added possibility of yet another volley right back down.
Possibly. The report was projected to be good. Q4 was looking really strong, as the economy spurted higher. It did the same in Q4 1999, just before the market topped and the economy later crashed. Part of the problem was that the Federal Open Market Committee (FOMC) drained the money supply and ratcheted rates higher and higher, even throwing in a 50 base point hike in May 2000 to finish off any vestiges of growth and market upside. We went from boom to bust in less than two quarters. Mission accomplished, Mr. Maestro Alan Greenspan!
NOTE: The figures and information above are from the 12/2 report.
NOTE: The videos are from the 12/1 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:
Advanced Micro Devices, Inc. (NASDAQ: AMD): AMD has been a steady moneymaker for us in Q4, and indeed for much of the year, because it set up a great base, broke higher and gave us a few great entries. The latest of these was in late October, as AMD tested a nice October rally off of that early October low. AMD then put in a great flag test of the 10-day exponential moving average (EMA). This metric is often used as a new rally point by a strong stock. As we were watching, we put it on the report.
On Nov. 1, AMD made a break higher and we entered the first play. I have already discussed it.
AMD tested that move after a run into the second week of November. Again, it used the 10-day EMA as support. When AMD broke higher again from the 10-day EMA on Nov. 11m we issued an alert to buy January $145 call options for $12.35.
AMD rallied from there and gapped to a new high, and the initial target, on Nov. 18. Per the plan, we issued an alert to sell half of the options for $20.20 in order to bank a 63% gain.
AMD tested from there, held the 10 day EMA, then rallied toward the end of the month. On Nov. 30, AMD gapped upside and stalled. As the other market leaders were sluggish as well, we issued the alert to sell another half of the options for $24 in order to bank a 94% gain.
We also banked gains this week in the following play:
Matterport Inc. (NASDAQ: MTTR): 71% gain in the options, 15% gain in the stock.
Here are two 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): After a long period of dormancy during which AAPL put in a good base, the stock came to life during the second half of November. We used that initial move to make great money, and were looking for a new entry. It showed up in late November, as AAPL tested the breakout from its base. It faded to test the 10-day EMA and held at a position where a strong breakout stock would find near support.
Sure enough, AAPL started upside off of the 10-day EMA and was ready to resume the move. We issued an alert to buy January $160 call options for $6.90. AAPL surged during the next session and again on Dec. 1, hitting $170. At that point, AAPL stalled. With the market overall acting sluggishly, we issued an alert to sell the options for $12.85 and bank an 86% gain.
We took gains in the following positions this week:
Atlassian Corporation PLC (NASDAQ: TEAM): 63% gain in the calls on Dec. 2, and a 125% gain in the put options on Dec. 3.
Here are two completed trades from Success Trading Group , offering insights into our trading strategy and the targets that we have hit this week:
Matterport Inc. (NASDAQ: MTTR): This was a new issue in 2021, and we love playing base breakouts on new issues. This is because the moves are explosive. Indeed, MTT broke higher from a nine-week base during the third week of November, and we wanted to get in when it came back to test the 10-day EMA and set up the continued breakout move.
On Nov. 22, MTTR made the bounce off of the 10-day EMA with a solid gap. So, we issued an alert to buy the stock for $28.71. MTTR, however, did not want to hold the move and faded to the 10-day EMA by the close. That was all the stock needed, however, as it surged back upside and rallied past the original breakout high with a strong move on Nov. 29.
That was our target, and we issued an alert to sell the stock for $31.28 in order to generate a nice 8.7% gain.
We also took a gain in the following position this week:
United Microelectronics Corp. (NYSE: UMC): 4.5% 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.
3. Covered Call Options Play
United Natural Foods Inc. (NYSE: UNFI) — United Natural Foods Inc. is currently trading at $49.53. The Dec. 17 $50 Calls (UNFI20211217C00050000) are trading at $3.10. That provides a return of about 8% if UNFI is above $50 by the expiration.