1. Market Summary
Excerpted from Wednesday’s paid content of Investment House Daily due to the Friday holiday.
Mortgages Continue Their Decline
– The Producer Production Index (PPI) hits a year-over-year record, but stocks overcome this news and rally.
– Mortgages continue their decline.
– Stocks move higher with some breadth present. Metals, oil, discount retail and some big names look good, but most… meh.
– Large-cap indices do what they need to in order to be able to try to set up inverted head-and-shoulders patterns.
The PPI notched an all-time annual increase at 11.2%. Stocks initially fell on the news, but pretty much from the open, stocks caught a bid and steadily rallied from the open to the close. Even so, the indices were oversold enough for the bids to return. It is noteworthy that the large-cap indices held at the levels where they could form right shoulders to inverted head-and-shoulders patterns.
That makes the moves from larger-cap growth stocks very interesting — along with the gains in oil, metals, discount retail, etc. These areas are trending higher, even as the overall market sold off. All were moving higher together, with leisure and entertainment moving higher once again. Rallying on bad news is an indication that the market is sold out in the near term.
NOTE: The figures and information above are from the 4/13 report.
NOTE: The videos are from the 4/13 report due to the Friday holiday.
2. Targets Hit
When the economy starts seeing slower economic data and a rise in inflation, the sectors in the market react. Some move up and some move down. It makes for great trading in Investment House Daily, as we plan to wait for the market to decide if it is heading lower in a recession-like move, or if it can shake the problems off and continue trending higher. During this period of volatility, a lot of investors leave the market. On the other hand, we make a lot of money by identifying the great patterns — upside and downside — and taking the money the market is handing out. Below are some trades we made this week by specifically taking advantage of the scenario.
Bank of America Corp. (NYSE: BAC): Interest rates are rising but banks are falling. This shows the critical importance of identifying charts and what they are telling you. We used this to play BAC downside in a rising interest rate environment, banking a 66% gain in the put options this week.
Dollar General Corp. (NYSE: DG): Inflation and nervous consumers equals shopping at discount retailers. We saw DG make a great post-earnings test, issued a buy alert when it bounced and issued a sell alert this week to bank a 95% gain in the call options.
Walmart Inc. (NYSE: WMT): This is the same story as DG and another great upside pattern. WMT surged but started to peak. So, we issued a pair of sell alerts to bank 180% and 148% gains in the call options.
Olympic Steel, Inc. (NASDAQ: ZEUS): Metals remain hot, especially steel. We just made good money on ZEUS, and after a test, it started back upside on 4/11. We issued an alert to buy some stock and July $35 calls. On Friday, ZEUS hit the initial target, and we sold half of stock and half of the options for a 10.4% and 34.4% gain, respectively.
Once again, some stocks are heading higher and others are heading lower. We don’t care if we catch them coming up or going down in Technical Trader Alert. The goal is to take what the market gives and make money. Accordingly, we played the upside, we played the downside and we made nice gains.
Helmerich & Payne, Inc. (NYSE: HP): 102% gain in the call options.
NetApp Inc. (NASDAQ: NTAP): 38.5% gain in the put options.
NXP Semiconductors NV (NASDAQ: NXPI): 67.9% gain in the put options.
Ross Stores, Inc. (NASDAQ: ROST): 62.5% gain in the call options.
There were no trades in the Success Trading Group this week.
Still, 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
Callon Petroleum Co. (NYSE: CPE) — Callon Petroleum Co. is currently trading at $61.64. The May 17 $65 Calls (CPE20220500C00065000) are trading at $4.50. That provides a return of about 14% if CPE is above $65 by the expiration.