1. Market Summary
Excerpted from Thursday’s paid content of Investment House Daily.
Meta Fouls the Plugs
– Alphabet (NASDAQ: GOOG) sparked more upside and Meta (NASDAQ: FB) fouled the plugs. Will Amazon (NASDAQ: AMZN) swing the pendulum again?
– Earnings are key. Jobs are as well. What is Chairman Powell to do?
– Institute for Supply Management Services (ISM) data are fading along with other figures, as central banks continue to play tough.
– Growth and (almost) everything else came under heavy fire, but key names left themselves in a position to continue the relief rally — which no one believes is possible.
– We are keeping the bigger picture in mind.
An interesting bifurcation is emerging over the course of this earnings season. The companies that are willing to forgo certain segments of society based upon their beliefs aren’t making as much money. These companies include Meta, Twitter and Paypal. Others, e.g., Alphabet, Amazon and Qualcomm, appear to be doing fine. Thus, the session after Alphabet’s blowout results saw stocks shoot higher, but Meta’s dramatic blow up closed the market lower.
NOTE: The figures and information above are from the 2/3 report.
NOTE: The videos are from the 2/2 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:
NVIDIA Corporation (NASDAQ: NVDA): While we continue to play oil stocks to the upside and growth to the downside, there are perfect setups inside the overall trends that tell you, “Hey, I will make you money.”
Sure enough, after the fall of the big-name Nasdaq stocks into late January (and we won’t even get into the “as goes January” adage today), the big Nasdaq names then set up patterns telling us that they were going to put in a bounce. More than that, the market sentiment indicators were ripe for a solid move: the put/call ratio closed at over 1.0 for six straight sessions, bullish sentiment dipped below 40 and the Chicago Board Options Exchange’s CBOE Volatility Index (VIX) spiked to near 40. There were plenty of reasons for a bounce of more than a day or two.
Thus, I was looking for plays that were ready to bounce and that could make us a good, easy gain on that bounce. NVDA jumped out at us because it had a short double-bottom at the 200-day simple moving average (SMA) after filling an upside gap from late October. As an aside, you may recall that, in the past, we played that move down to fill that gap for a nice gain. After we ran the numbers, we saw that NVDA could be a solid stock with just a few sessions of upside.
When NVDA gapped off of its second bottom at the 200-day SMA, we issued an alert to enter. The play was a 200-day SMA bounce. We ended up buying March $235 calls for $19.79. During the next session, NVDA rallied and gapped higher again on Feb. 2. After that gap, it started to stall somewhat.
Then, big earnings from Alphabet helped push the big tech stocks higher, and Meta’s earnings were due after the market closed. As a result, we opted to sell half of the options for $29.50 in order to bank a 49% gain.
NVDA gapped lower during the next session, but it held its support at the 180-day moving average (MA). NVDA could possibly produce another leg higher on this move before it stalls out, and we are looking at playing that move.
We also took a gain this week in the following position:
Marathon Oil Corporation (NYSE: MRO): 19% gain in the stock, 105% gain in the options
Here are two completed trade from Technical Trader Alert, offering insights into our trading strategy and the targets that we have hit this week:
Broadcom Inc. (NASDAQ: AVGO): Similar to the Nasdaq overall, AVGO — a leader in the semiconductor sector — was oversold in late January. Indeed, AVGO tapped the 200-day SMA intraday on Jan. 24 and shot higher from there. That alone was not enough to get us in, but after AVGO bounced for two sessions and then faded to test the 180-day moving average (MA), we became interested.
AVGO jumped off of the 180-day MA to a higher low. The Nasdaq was way oversold, and sentiment indicators were extreme. Clearly, the market was set to bounce. So, we ran the numbers on a return for a relief move and they worked out well.
Accordingly, when AVGO gapped upside on Jan. 31, we issued an alert to buy April $560 call options for $38.50. AVGO continued higher on Feb. 1, and it gapped higher to the 50-day SMA on Feb. 2. This was because it was riding a wave of good tech sector earnings. That gap and run took AVGO to the 50-day SMA as noted, but this was also an important level because it showed the prior lows and gaps.
Yes, it was a good setup, but this was also a very volatile market. It did not take much thought to bank some gains. We issued an alert to sell half of the options for $59.40 in order to generate a 54% gain. During the next session, AVGO did gap lower on the Meta results, but it is holding at some support. As a result, it could easily put in another higher low and bounce yet again.
This past week, we also took a gain in:
Occidental Petroleum Corporation (NYSE: OXY): 120% gain in the call options
Here are two completed trades from Success Trading Group, offering insights into our trading strategy and the targets that we have hit this week:
Kosmos Energy Ltd. (NYSE: KOS): Energy, specifically oil and gas, remains hot. Indeed, the sector is almost on fire. When it catches, it produces nice setups that we can play again and again. KOS is a stock that often provides those opportunities.
After a breakout in early January, and a test to the 50-day MA during the third week of the month, KOS was setting up to move again. Indeed, on Jan. 25, KOS jumped off of the 50-day MA test and resumed its breakout after the pullback. We issued the alert to buy the stock for $4.61.
The stock closed for the day at $4.74. While this was a good start, the market then stepped on its own foot. As a result, stocks faded for three sessions. KOS fell, but it held its support above the high points in the prior base. A pair of candlestick dojis at the breakout point also indicated that KOS was heading back up. So, we held the position. On Feb. 1, KOS jumped back up.
A steady rally into Friday and a new breakout high put KOS at the initial target. As a result, we issued a sell alert to sell the stock for $5.06 in order to bank a solid 9.7% gain.
This past week, we also took a gain in:
Murphy Oil Corporation (NYSE: MUR): 4.37% gain in the stock in four sessions
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
Titan Machinery Inc. (NASDAQ: TITN) — Titan Machinery Inc. is currently trading at $29.97. The March 18 $30 Calls (TITN20220318C00030000) are trading at $2.15. That provides a return of about 8% if TITN is above $30 by the expiration.