Weekender for 3/19/2023
1. Market Summary
Big Tech Surges
- Big tech surges, leaving all else in the dust.
- Credit Swisse takes $54 billion from the Swiss National Bank (SNB), European Central Bank (ECB) shows “confidence” and hikes 50 basis points, U.S. Bank consortium bails out First Republic Bank. Just a normal setting for a blowout rally.
- Fed/Treasury requiring some payback from the big banks?
- JP Morgan Chase says the Fed has restarted a stealth quantitative easing.
- The liquidity strain has ended near term, but the event has not ended.
- Credit default swap, sovereign risk remain high, suggesting issues remain.
- Expiration Friday, big names up four sessions heading into the weekend. Perhaps some profit taking.
Stocks love bailouts whether central banks or any other source. With the SNB bailing out Credit Suisse (Credit Suisse took $54 billion from SNB), the ECB was free to continue its path and raise interest rates by 50 basis points as planned versus shocking markets with a lesser amount. The “vote of confidence” in the path bolstered European stocks and U.S. stocks.
Later in the session, First Republic (FRC) was bailed out by other banks as a consortium of big banks (11 total) agreed to $30 billion in unsecured, uninsured deposits into FRC. The banks laid out calming language in their press release, noting that “the banking system has strong credit, plenty of liquidity, strong capital and strong profitability. Recent events did not change this.”
So, the banking industry is fine — it should be, as there is nothing like getting free money from the government; beats making loans for a living. Wow, no taxpayer money is being used. No, just the high fees that likely move higher in the wake of all these actions.
NOTE: The figures and information above are from the 3/16 report.
Watch the Investment House Videos For This Week Here!
NOTE: The videos are from the 3/15 report.
2. Targets Hit
Investment House Daily:
Microsoft Corp (NASDAQ: MSFT): Several factors came together the past couple of weeks that made big tech big buys. The bank crisis rattled confidence in the markets. People pulled money from smaller banks and moved it to larger banks, the “too big to fail” banks that I say became too “bigger” to fail with these moves. The same thing happened with the huge, mega-cap tech stocks: money was put in them as some sort of safe harbor. Seems insane, but that is what people were telling us.
Another factor involved the Fed and its actions. Economic data, despite the puffed up government jobs reports, are trending lower. It is easy to see that, yet somehow a lot of heads on the financial stations cannot see it, do not want to see it or are paid not to see it.
The market is seeing it. Thus, as the data deteriorates and then banks come into jeopardy, the conclusion is the Fed will have to forego further interest rate hikes and indeed start cutting interest rates before September. Techs love easy money, and the prospect of Fed largesse returning was a further catalyst to push money their way.
We saw the shifts in these patterns. Indeed, some were already working on bases while some others were still pretty beat up. Regardless of their condition, however, the started higher this week. We saw it and didn’t really like them, but their patterns were speaking. Thus, we bought.
MSFT is a group leader and it actually had a good pattern, a double bottom on at the 50-day simple moving average (SMA) that was testing the January to mid-February run. When MSFT broke higher, we issued the alert on March 4 to buy May $255 call options asking $16.15.
MSFT closed higher that session, moved higher by 2% the next, then surged higher Friday, moving to the February peak. Friday MSFT surged yet again, moving just past those peaks. The stock started to stall and we figured 1) up five sessions in a strong surge, 2) moved through resistance but starting to stall and 3) weekend ahead in an uncertain and serious financial situation. Time to bank some gains.
We issued an alert to sell half the calls that were bidding $32.45, a solid 101% gain. We may have moved a bit early as the options traded up to $34.50ish — we still have more of the position, however, to take advantage of further upside.
Matador Resources Co. (NYSE: MTDR): We also banked some downside gain on an oil stock, as those have come under fire this month as world economics decline and oil prices have tanked. We picked up MTDR in a bear flag move, one where a stock breaks support then rebounds to test it and fail. That is what happened with MTDR, and we banked 49% on the put options.
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Rapid Profits Stock Trader:
Over the past two months, dramatic volatility, both intraday and day-to-day, is a hallmark of this market. Add to that some rather strange bedfellows in terms of what sectors are rising given the issues confronting all financial markets. That has made for an interesting mix of stocks on the move.
This week, we booked some gains on some of those disparate stocks. McEwen Mining Inc. (NYSE: MUX) is a favorite of ours in the precious metals markets since it started its move in November of last year, when I highlighted it at the Las Vegas Web 3 Expo in October. On the other side is Fastly Inc. (NYSE: FSLY), a software stock. It is a stock we like to play, and it started a run during the very last days of December.
Both of these stocks had in common that they were “turning the corner,” as I like to say. They have trended lower or been in a trading range or long base and are showing the signs of turning upside to recover those losses. When we find these stocks, we can play them again and again as they make their periodic runs after tests.
Both put in good runs as they turned the corner. They did not move lockstep, but they both trended higher. Thus, we could play one when it set up, the next when it set up. In this way, we recently made solid plays on both of these as they set up again for another leg higher after a pullback.
MUX gained us 12.55% on our most recent play, FSLY 8.18%. Once a stock turns the corner, we can capture the upside legs, taking the upside and avoiding the downside, and we can repeat this process several times when the stock makes that turn, when it “turns the corner.”
Now is a good time to become a member of Rapid Profits Stock Trader. The system is geared towards bringing you consistent, short-term gains of 5-10% and you can expect four to six trades every month.
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3. Covered Call Options Play
Oceaneering Intl. Inc. (NASDAQ: OII) — Oceaneering Intl. Inc. is currently trading at $17.16. The April 21 $17.50 Calls (OII20230421C00017500) are trading at $1.05. That provides a return of about 10% if OII is above $17.50 by the expiration.
