Weekender For 4/3
1. Market Summary
Excerpted from Thursday’s paid content of Investment House Daily.
A Second Day of Downside
– We saw a second day of downside, and while some stocks were sharply lower, the Nasdaq was notably mild. Even sharper selling left the indices easily over their support levels. Sectors are currently split into two categories: those that are still fine upside and those that are breaking sharply lower.
– Despite the selling, the same themes still remain in terms of stocks that are trending higher and stocks that are struggling. Meanwhile, the two-year/10-year yield curve inverted intraday again, and the spread is at one basis point.
– There is more news regarding the dollar’s reserve status. Spending misses and real spending is negative, as surging inflation has led to demand destruction. Gold is in a solid upside pattern.
– Friday was jobs Friday. Were there good jobs numbers? We we warily watched for a jump on the jobs report.
The selling continued for a second session. There still was sharp selling on the S&P 400 and the PHLX Semiconductor Sector (SOX), as well as on the DJ30. Meanwhile, selling is getting sharper on the Nasdaq and the S&P 500. The Russell 2000 (RUT) was the relative strength leader, as it moved back on its selling to -1%.
NOTE: The figures and information above are from the 3/31 report.
Watch the Investment House Videos For This Week Here!
NOTE: The videos are from the 3/30 report.
2. Targets Hit
There were two trades in Investment House Daily this week.
Walmart Inc. (NYSE: WMT): Sometimes, boring is good. And sometimes, it makes sense. With inflation, discount retailers are seeing more business. With a slowing economy — as many of the leading economic numbers are showing — consumers are also heading to the discounters. Combine the above with a very nice double-bottom-with-handle base that started in November 2021 and you have a play with the odds stacked in your favor.
Accordingly, we put WMT on the report and watched for when the buy signal would flash. The buy triggered on March 28, when WMT broke higher off of the 200-day simple moving average (SMA). This was the support for the handle in the pattern. We issued the alert to enter by buying June $145 call options at $5.00.
WMT finished that session in a strong position, and then it put in two more quick, sharp upside sessions into Wednesday, March 30. During that session, WMT touched our initial target. So, we issued an alert to sell half of the options for $7.80 and bank a nice 56% gain.
After that solid breakout move, WMT is testing a bit, as is normal. Thus far, it has not given up ground. This is always a good sign for a breakout. We anticipate a lateral move for a few sessions followed by a new leg higher, which we will use to bank more gains when that leg starts to stall.
We also banked a gain in the following position:
Cloudflare Inc. (NYSE: NET): 64% gain in the options.
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There were three trades in Technical Trader Alert this week.
Masco Corp. (NYSE: MAS): After a long housing boom, some of the housing materials stocks started to slide. MAS was one, as it had peaked in late 2021. It then rolled over and slid below the 10-day exponential moving average (EMA) through February and into early March. Indeed, MAS showed a very pernicious downtrend, as it was unable to rise above the 10-day EMA despite five tests of that level on bounces. After about four to five tests, however, you start to look for a break above that level to test higher, which is often the 50-day moving average (MA). MAS rose into mid-March, came close to the 50-day MA and then stalled.
That was the entry signal we were waiting for. On March 23, we issued an alert to buy June $55 put options for $3.20. MAS rolled downside into last Friday and hit our initial target. We issued the alert to sell half of the position for $4.70 in order to produce a 46% gain. Since the drop was good, we wanted to let MAS work even after it sold down to match the early March selloff low.
Well, MAS bounced on the following Monday and again on Tuesday, moving up to the 20-day EMA. It tried to break the 20-day MA but failed, so we kept the position open. Sure enough, during the next session, MAS posted a solid loss and then gapped and sold off to a new downtrend low. We are letting it work lower until it shows us a signal that it is ready to bounce again. At that point, we will lock in more gains.
We also took gains in the following plays:
HP Inc. (NYSE: HPQ): 50% gain in the options.
NVIDIA Corporation (NASDAQ: NVDA): 25% gain in the options.
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There was one trade in the Success Trading Group this week.
Western Copper and Gold Corp. (NYSEAMERICAN: WRN): Copper has continued to perform, but sometimes a breakout can test that conviction. WRN set up a great pattern from October 2021 by breaking higher in late February and moving up into early March. From there, WRN consolidated and worked laterally as the 10-day EMA caught up to the move. As is often the case on a breakout, when the 10-day MA caught up, WRN took off upside again.
Since that was the entry signal we were waiting for, we issued an alert to buy WRN stock at $1.98. The stock closed easily over $2.00 at the end of that session and looked great. It tested very modestly during the next session, but after that, it flopped to the 20-day EMA in a one-day move. Once there, it stayed around that metric for four sessions — this is the conviction testing point.
It held, however, and then started a slow, slow move up the 10-day EMA. After this rest, however, WRN once again found solid buyers and shot higher by 18%. Well, that hit our initial target, and we issued an alert to sell half of the position for $2.19 in order to bank a 10.6% gain.
We kept half of the position working because the stock was so strong. WRN paused and then surged again on the session. When it started backing off a bit from the intraday high, we issued a second alert to sell the other half of the position for $2.31 in order to bank a 16.6% gain. Taking that first half off allowed us to relax and enjoy the move, knowing we had a solid 10% gain banked. This allowed us to let the move work.
As it turns out, that was another near-term peak for WRN, as it has pretty much hung out in the $2.30 range for a few 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.
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3. Covered Call Options Play
Titan International Inc. (NYSE: TWI) — Titan International Inc. is currently trading at $14.73. The May 17 $15 Calls (TWI20220517C00015000) are trading at $1.05. That provides a return of about 13% if TWI is above $15 by the expiration.
