Invest and Trade Profitably with Jon Johnson

Weekender for 2/12

1. Market Summary

Stocks Rush Higher, Rush Lower

  • Stocks rush higher, rush lower.
  • Nasdaq, PHLX Semiconductor Sector (SOX), Nasdaq 100 manage to hold the pullback, other indices blow up, break the prior low in the pullback.
  • Fear of volatility, fear of a big put buyer.
  • Many now speaking out about the Fed’s softening stance.
  • Did the rally get blown out Thursday? Watching the leading indices and sectors, suspecting it might be the end of the rally.

Stocks started Thursday with something to prove, i.e., the Tuesday renewed rally was no one-day wonder. For all but SOX and arguably the Nasdaq and Nasdaq 100, they were proved wrong.

Futures sported solid gains with DJ30 200+, Nasdaq 150+. Didn’t last. Stocks opened higher, and for almost an hour held the gains. Then they didn’t. The bids died, dried, were fried — whatever you want to call it.  They disappeared as did the gains in a steady selloff into the last hour.  The most modest of bounces allowed Nasdaq and Nasdaq 100 to cling to the 10-day exponential moving average (EMA). Don’t let SOX’s gain fool you; it gave up a higher recovery high on this bounce and hung onto fractional gains.

NOTE: The figures and information above are from the 2/9 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 2/8 report.

2. Targets Hit

Investment House Daily:

The rally from October continued this past week … at least at the start. A good pullback to test the last leg found new buyers on Tuesday, jumping stocks up from the two-day test of near support. Looked great. The leaders in the move, e.g. semiconductors, materials, metals, performed fine. Other sectors started dropping out of the move, and the indices faltered. Thursday saw leaders start sharply higher but then faltered — that was the cue to bank some more gains. We closed several positions with trailing stops while leaders shot higher to hit new targets. Here are some of the targets hit.

McEwen Mining Inc. (NYSE: MUX): 50.6% gain in the stock position.

NVIDIA Corporation (NASDAQ: NVDA): 157% gain in the options.

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Technical Trader Alert:

The leaders in this most recent leg of the market rally off the October lows continued to perform the past week, but it was not all upside. After a strong prior week, there was some testing among leaders, testing that turned into more serious selling in the followers — the hanger’s on, so to speak.

Even with the testing, however, leaders mostly held onto their uptrends while some shot to even higher highs.  With this rally off the October low now four months old, given the economic weakness and market signals such as the bond curve inversions, you still have to exercise caution on the upside.

This may just be a test of the move — after all, many indices broke through the 2022 downtrends, rallied more, and are now testing that break.  That is not bad at all.

Thus, while we are cautious and are ready to take gains when strong moves are registered, we are watching for new upside opportunities as the leaders test.

As for gains we banked last week, below are some leaders that epitomize the strength some areas have shown while others somewhat languish.

Steel Dynamics, Inc. (NASDAQ: STLD): 204% gain in the options.

Tesla Inc. (NASDAQ: TSLA): 139% in the options.

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3. Covered Call Options Play

Ziprecruiter Inc. (NYSE: ZIP) — Ziprecruiter Inc. is currently trading at $22.25. The March 17 $22.50 Calls (ZIP20230317C00022500) are trading at $1.20. That provides a return of about 8% if ZIP is above $22.50 by the expiration.

Learn more about our Covered Call Tables here!

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