Weekender For 4/23
1. Market Summary
Volatile Session After a Gap Lower
- Volatile session after a gap lower as stocks rebounded off the lower open but could not hold the moves.
- Indices show very credible doji at near support, but the PHLX Semiconductor Sector (SOX), DJ20 downside worrisome.
- Philly Fed, existing home sales, Leading Economic Index (LEI) atrocious
- Tons of Fed-speak ahead of the quiet time
- Tax receipts thus far very weak
- Save the chips, kill our young people
- Expiration and leaders and SOX
You can pick your reasons to pin on the cause of the Thursday loss — there were plenty — but in the end you have to look at the action. Every index outside SOX and Nasdaq 100 showed tests that put them with doji over near support. Yes, the indices just tried and failed to take out next resistance, whether prior recovery highs or other resistance, again looking weaker in their inability to make the moves. The doji at near support shows the buyers held the indices in place yet again. A continuation doji downside? Could be, but the indices had reason to say “forget it” and sell, and while they were lower, they didn’t break. A familiar story.
NOTE: The figures and information above are from the 4/20 report.
Watch the Investment House Video For This Week Here!
NOTE: The video is from the 4/19 report.
2. Targets Hit
Investment House Daily:
Sometimes not sexy is sexy. When? When it comes to making money. Clorox Co. (NYSE: CLX) — about as basic as you can get. I suppose it had some cache during COVID-19 and when Hillary Clinton used BleachBit to wipe her harddrive. But still, it is mostly bleach.
That said, when the market turned more defensive post-Silicon Valley Bank, personal products became popular. CLX was coming off a 50-day moving average (MA) test in March and started moving up the 10- and 20-day exponential moving averages (EMAs). What I really liked about CLX was the big gap lower from February 2022. That set a nice target to shoot for in terms of a gap fill. What I also liked was the early February gap back upside over the lower gap point — the move meant business. The stock’s proximity to the February gap provided a very good target to play for as CLX continued higher.
Late month the stock price put in a three-session dip to the 20-day EMA It edged higher from there, then, on April 5, it started to move back upside from the test. That was our entry signal, and we issued the alert to buy May $160 call options asking $4.60 with the stock trading at $158.28.
The subsequent move was not sexy … until it was. CLX continued to edge higher, cleaning up one point at a time to the upside. This past week, the personal products stocks rallied. Sure, there is no recession in the data, no recession coming, etc., just the defensive stocks performing better. CLX rallied Tuesday to Friday, gapping upside Friday as Procter & Gamble Co. announced solid earnings. That move filled the gap, our target for the play. We issued the alert to sell the options that were bidding at $7.25 and a solid 57+% gain.
We also banked gains this past week in the following positions:
Omeros Corporation (NASDAQ:OMER): 60.9% gain in the stock
Omeros Corporation (NASDAQ:OMER): 31% gain in the stock (a second play on OMER — we have no issue with putting more money into a winner as it sets up new entries.)
Receive a risk-free trial to Investment House Daily and save 50% by clicking here now!
3. Covered Call Options Play
Amphastar Pharmaceuticals Inc. (NASDAQ:AMPH) — Amphastar Pharmaceuticals Inc. is currently trading at $43.04. The May 19 $45 calls (AMPH20230519C00045000) are currently trading at $0.70. That provides a return of about 10% if AMPH is above $45 by the expiration.
