Invest and Trade Profitably with Jon Johnson

Weekender for 2/13

1. Market Summary

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

The Market Gets ‘Bullarded’

– The market weathered hot inflation as expected. Although it rebounded sharply, it then got ‘Bullarded.’
– Bullard barks regarding the possibility of a 50-base-point rate hike.
– The Consumer Price Index (CPI) is a bit hotter, and the year/year figure is scorching, but, of course, it is all transitory.
– Indices and growth stocks are at a crossroads.

The Nasdaq opened -262 points on the heels of hot CPI inflation. Futures dropped from -18 Nasdaq points to -200 just before the open. The low, however, was the open, as the Nasdaq rallied by 280 points in 1.25 hours. All the indices flipped from negative to positive. We had anticipated this resilience, even on a somewhat hotter CPI (0.6% vs. 0.5% expected). Meanwhile, the market, after that initial hiccup, figured it out and was set to continue the second leg of the relief move.

NOTE: The figures and information above are from the 2/10 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 2/9 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:

Micron Technology, Inc. (NASDAQ: MU): After that sharp January selloff and initial bounce, we saw big-name Nasdaq and technology stocks testing and setting themselves up for a second leg higher in the relief rally. We also saw many short, inverted head-and-shoulders patterns, a pattern that, after a selloff, has a very high win percentage in this market. We saw this same setup in MU right at the 200-day simple moving average (SMA).

Thus, on Feb. 8, when MU jumped off of the bottom of its right shoulder in the pattern, we were ready to move in. We bought April $82.50 call options for $6.50. The target was the January consolidation range just before MU had sold off.

MU jumped during both that session and the next two sessions. It then surged to that prior range and our target. As you never know how long these relief rallies can last, we opted to take the gain. We sold the options for $11.10 in order to bank a solid 70% gain.

We also took a gain in the following position:

Bath & Body Works Inc. (NYSE: BBWI): 49% gain in the options with a nice one-day-long turnaround.

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Here are two completed trade from Technical Trader Alert, offering insights into our trading strategy and the targets that we have hit this week:

VMware, Inc. (NYSE: VMW): VMW was taking a different route than most growth stocks. Instead of selling off in January, VMW was on the comeback trail. It even rose from a selloff low in mid-December. While it was a steady mover, it was able to rally up the 20-day exponential moving average (EMA).

VMW reached the 50-day EMA in January, formed a lateral move for four sessions and then broke up through it. After that break, it consolidated for four sessions. We were watching and looking for a new move higher to be our signal to enter.

On Jan. 18, VMW did break higher off of the 50-day EMA. So, we bought April $125 calls for $8.40. VMW jumped higher during that session and the next, but it faltered and gave back the moves. It then put in a quick dip, held and bounced right back upside. That reset the upside move, and VMW marched up the 10-day EMA into February.

On Feb. 9, VWM jumped up to the 180-day moving average (MA). This was our target, as it coincided with the lower gap point from a massive November downside gap. We then sold half of the options for $13.70 in order to bank a 63% gain.

We left the other half of the play to see if it would break through and enter the gap zone. On Feb. 10, VMW did break higher … but it could not hold the move over the 180-day MA. So, we issued an alert to sell the remaining position for $11.90 in order to bank a 41.6% gain.

We also took a gain in the following position:

Occidental Petroleum Corporation (NYSE: OXY): 121% gain in the options.

Receive a risk-free trial to Technical Trader and save 50% by clicking here now!

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

Photronics, Inc. (NASDAQ: PLAB): During the growth stock selloff, PLAB held up remarkably well and produced a rather normal 50-day MA test after a rally into January. We saw the strength and saw the good test. So, when PLAB started back upside, we were ready to move in.

On Jan. 31, PLAB made the break higher from the 50-day MA, and we issued an alert to enter the play by buying the stock for $17.87. The play was to capture a move back to the consolidation range before PLAB took its dip to the 50-day MA.

PLAB rallied into early February, but it then made a quick test after four days upside from the 50-day MA. It held its support and reversed intraday, resuming the move higher into this past week. On Wednesday, Feb. 9, PLAB gapped higher, rallied to tap the consolidation range and then started to stall. We issued an alert to sell the stock for $18.89 in order to bank a solid 5.7% gain.

We also took a gain in the following position:

Flowserve Corp. (NYSE: FLS): 4.3% 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.

To receive a risk-free trial and save 50%, click here now!

3. Covered Call Options Play

Whiting Petroleum Corp. (NYSE: WLL) — Whiting Petroleum Corp. is currently trading at $69.87. The March 18 $70 Calls (WLL20220318C00070000) are trading at $4.90. That provides a return of about 8% if WLL is above $70 by the expiration.

Learn more about our Covered Call Tables here!

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