Invest and Trade Profitably with Jon Johnson

Weekender for 2/26

1. Market Summary

NVIDIA Fuels a Gap Higher

  • NVDA fuels a gap higher, then volatility takes over
  • Q4 gross domestic product (GDP) second read is stronger yet weaker with GDP lower, Personal Consumption Index (PCE) higher, consumption lower
  • Vicious selloff of the early rally followed by an afternoon rebound
  • Indices test, hold support ahead of PCE
  • Some solid sectors are losing leaders, though there are still upside setups in many market areas
  • The pattern since the early February Powell Presser Put rally is failed rally attempts
  • The market again awaits for data, not for what they say about the economy, but how the Federal Open Market Committee will respond.

Thursday was an impressively volatile session. Futures started higher on the heels of NVDA’s earnings and guidance. The premarket data showed Q4 PCE prices revised higher to 3.9% from 3.5%, even as GDP revised lower to 2.7% from 2.9% as personal consumption fell 1.4% from the first read at 2.9%. Futures faded some gains, held and rebounded, with Nasdaq futures higher after the data than before.

NOTE: The figures and information above are from the 2/23 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 2/22 report.

2. Additional Analysis

USD versus not USD. Afterhours, we learned that Iraq is the next country to drop the dollar in trade with China. Iran, Saudi Arabia and Russia have done so, others perhaps have already done so. That East versus West currency fight discussed earlier this week continues to ramp up as we discussed. The BIG, BIG change will come when the first European country breaks ranks.

Germany was in talks with Russia for natural gas — in rubles of course — when the United States, Finland and who knows who else, according to Seymour Hersh, blew up Nord Stream. Scratch that.

Who would be likely? Hungary? Its prime minister and delegation snubbed Biden, also stating that the Ukraine war did not start with the Russian invasion but well before that with the encroachment of NATO upon Russia. Pretty gutsy considering what happened when Germany was thought to be talking to Russia.

What other European countries would have impetus? How about those who are the whipping boys of the rest of the EU, e.g. Greece or Italy? Greece still wants war reparations from Germany. Italy feels it has been used by the EU. It may take a while, it may never happen, but if and when a western country makes the break, even if just to “also” use another currency, then we see if the dominoes fall.

What happens in that instance? There are hundreds of billions if not more USD sitting in SWIFT owned by other countries (not Russia, at least not any more) as well as in their own central banks to use in international trade settlements. If a significant percentage of trade no longer requires dollars, those dollars are sold for the other currency of choice. Where do the dollars go? Back to where they were printed. More dollars back to the United States chasing the same number of goods and services. Explosive inflation, the kind the government can’t say is just 9% when it is really 15+%. No, the kind of inflation that Venezuela has.

Not pleasant thoughts, but if you live by the printing press, history says your currency dies by the printing press.

3. Covered Call Options Play

Astria Therapeutics Inc. (NASDAQ: ATXS) — Astria Therapeutics Inc. is currently trading at $12.80. The April 21 $15 Calls (ATXS20230421C00015000) are trading at $0.45. That provides a return of about 25% if ATXS is above $15 by the expiration.

Learn more about our Covered Call Tables here!

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