Weekender for 4/7/2024
1. Market Summary
- After a pullback stocks shoot higher — then are slammed in a large reversal
- Recent leaders lag early, close lower, but by the close look quite good compared to the non-commodities stocks
- Tuesday gap lower was the selling of another new high, and Thursday was a downside follow-through reversal
- Wars and rumors of wars quell the market upside
- How the Bureau of Labor Statistics’ (BLS) jobless claims reports are not laughed off the financial stations should be puzzling, but they are not because deviation from the company line is not allowed
- Anticipating a jobless report likely as bogus as the initial claims, but will that be good news or bad news?
Stocks started higher after the downside sessions with futures solidly positive with triple-digit-percentage gains on DJ30 and Nasdaq. Sharply higher gaps were monkey hammered by the sellers. Once again, a break higher was sold.
Tuesday, new highs were trashed as the indices gapped lower — reach a new high, the sellers dump it. On Thursday, a solid gap higher was trashed in the most massive reversal since March 8, this one smashing near support and even the 50-day moving average (MAs) for some indices. Similar selling has occurred off other higher highs.
This rally, and the large-caps helping lead it, were remarkably resilient to these selloffs of higher highs. When this repeatedly occurs, however, the foundation of the rally erodes and it typically breaks. Perhaps the Thursday upside gap and sharp reversal is the move. Then again, there are still jobs due Friday morning, and the BLS may try to pull a rescue maneuver, e.g. suddenly lower jobs forcing the Fed to alter its course (allegedly). In an election year? Risky.
NOTE: The figures and facts above are from the 4/4 report.
MARKET VIDEOS
MARKET SUMMARY
TECHNICAL SUMMARY/NEXT SESSION
NOTE: The videos are from the 4/3 report.
2. Targets Hit
Investment House Daily:
Another volatile week as stocks were again sold as the indices hit new highs. A sharp gap lower Tuesday followed by the Thursday upside gap and big reversal — sellers remain lurking, but thus far have not taken down the indices. Indeed, the market is showing healthy action: as the techs and semiconductors struggle some, the commodities-related areas performed. A market showing rotation among sectors without major selloffs is a healthy one.
Now, these sharp selloffs when the market moves higher are not good — it shows some big money liquidating positions. Thus far, however, it has not resulted in trend breaks for the indices, and, as has been the case with this market, the dips are bought. Thus, we used this action to accumulate good positions in the new leading groups, e.g. oil and gas, precious metals, materials, etc., and enjoyed banking some gains in them — along with some tech gains as well.
Alcoa Corp. (NYSE: AA): 87.89% gain in the options
Coeur Mining Inc. (NYSE: CDE): 34.35% gain in the stock
Seabridge Gold Inc. (NYSE: SA): 18.17% gain in the stock
Semtech Corp. (NASDAQ: SMTC): 32.02% gain in the stock
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Technical Trader:
We love playing the techs, but we also love playing any sector that is showing great technical setups that makes us money. Spotting rotation to new areas is always a key to making money, and that is what we have done in this market transition, rotation or rest period for big tech. Thus, this past week we banked some gains in those newer leading areas.
Chesapeake Energy Corp. (NASDAQ: CHK): 52.75% gain in the options
United States Oil Fund LP (NYSEARCA: USO): 65.60% gain in the options
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Rapid Profits Stock Trader:
A very cool aspect of the recent transitions in the market from the Mag Seven-type stocks (or are they just resting … ?) is the rise of stocks that trended lower, moved laterally very quietly and were basically forgotten. The started “turning the corner” to the upside as I like to say, and as they made breaks through key resistance levels we were moving in.
The mining stocks rode the move in gold to new highs. Not new highs for them — they were quite beaten down, but the prices at suppressed levels lead to large gains in the stock as they make that turn and sprint higher. We caught several of these on their moves and banked some nice gains. Very cool indeed.
First Majestic Silver Corp. (NYSE: AG): 14.99% gain in the stock
Coeur Mining Inc. (NYSE: CDE): 35.65% gain in the stock
Hecla Mining Company (NYSE: HL): 10.58% gain in the stock
Harmony Gold Mining Company Ltd. (NYSE: HMY): 10.5% gain in the stock
Seabridge Gold Inc. (NYSE: SA): 18.39% gain in the stock
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3. Covered Call Options Play
Travelzoo Inc. (NASDAQ: TZOO) — Travelzoo Inc. is currently trading at $9.81. The May 19 $10 calls (TZOO20240517C00010000) are currently trading at $0.80. That provides a return of about 15% if TZOO is above $10 by the expiration.
