Invest and Trade Profitably with Jon Johnson

Weekender for 5/22

1. Market Summary

Weak Futures But Not a Weak Session

– Weak futures but not a weak session. It was at least better than the futures indicated.
– The economic data are still weak. The same is true for existing home sales, as demonstrated by the Philly Fed. That, however, never stopped an economist from being wrong.
– Harley-Davidson Inc. pauses production for two weeks. Is this just a supply issue or is this a canary in the coal mine with respect to discretionary purchases?
– The Federal Reserve is relatively tone deaf to the consumer’s plight, but the Fed has a history of that.
– The PHLX Semiconductor Sector (SOX) and the S&P 500 have interesting near-term upside indications that we need to respect.
– May options expirations added some potential spice on Friday.

Thursday really looked as if it would be an ugly one, as futures fell sharply. This made sense, given the move lower on Wednesday and the apparent downside momentum after the Tuesday gap upside turned into a Wednesday gap lower and selloff.

NOTE: The figures and information above are from the 5/19 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 5/18 report.

2. Targets Hit

There were two trades in Investment House Daily this week.

Apple Inc. (NASDAQ: AAPL): With large, Nasdaq-name stocks trending lower as growth stocks bear the load of much of the selling, we are looking for opportunities to play the downside when they show up. In general, stocks trend lower along the 10-day and 20-day exponential moving average (EMA), just as they trended higher up the 10-day and 20-day EMA before rolling over.

To start the past week, AAPL set up a perfect bear flag. After the third leg lower on the Nasdaq, stocks bounced duirng the prior week into the past Monday. AAPL was no exception, bouncing up to just below the 10-day EMA, closing with a hanging-man doji. It then gapped up to a hanging man right below resistance in a downtrend. You can bet that we were ready to play some downside.

Sure enough, AAPL gapped lower. We issued an alert to buy July $155 put options for $10.30. AAPL sold to close near the low. During the next session, AAPL started a bit lower and then tried to hold. We issued the alert to sell half of the position for $13.50 in order to bank a 43.62% gain.

AAPL then stalled a bounce and rolled over. It sold off and hit our initial target. We issued an alert to sell another half of the options at $15.40 in order to bank a 63.8% gain. We left the last quarter to see if the stock would sell further.

We also took gains in another downside play that started Tuesday. We banked a 24% gain in Meta Platforms Inc. (NASDAQ: FB) put options in a day. As FB was down, but not tanking, we saw signs that the market wanted to bounce again. Accordingly, we banked that gain.

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There was one trade in Technical Traders Alert.

Microsoft Corporation (NASDAQ: MSFT): Similar to the other big-name Nasdaq stocks that were trending lower after their rollover, MSFT posted a relief rally into Monday. That move took MSFT from a lower 2022 low back up to the 10-day EMA.

When a stock trends lower and then stalls and falls from the 10-day EMA, this is a very pernicious downtrend. We love playing the bounces up to resistance that fail.

This one had a nice enhancement to it, a gap to a hanging-man doji just below the 10-day EMA. With a gap to a doji below resistance, we likely should have just bought in on the downside during that session. We did not, but that was okay.

On Tuesday, MSFT gapped lower, and we bought July $265 put options for $14.30. MSFT burned lower that session and closed at $254.08. During the next session, MSFT opened flat, tried to bounce and stalled. Even so, MSFT just held steady.

Okay, we issued an alert to sell half the position for $18.80 in order to bank a 31% gain. This was not the gain to the initial target at a new 2022 low, but it was very solid for less than a day in the trade. We decided to see if MSFT would continue lower off of the Thursday doji, given the sharp break lower on Wednesday.

On Friday, however, stocks opened higher. We went ahead and issued an alert to sell the rest of the position at $16.20 in order to bank a 13% gain. Now, we will see if MSFT will climb back up to the 10-day EMA and reset the downside move once more.

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There was one trade in Rapid Profits Stock Trader.

W&T Offshore, Inc. (NYSE: WTI): In a market with few accumulation patterns, WTI was showing an accumulation pattern — a two-month, cup-with-handle pattern. WTI tried the breakout early May, but that was exactly when some market selling hit. So, WTI faded the break. It held the 50-day moving average (MA) with a doji, however, and that had us still watching it. On May 13, WTI broke higher again and moved up off of the 50-day MA with a gap.

We issued an alert to buy the stock for $5.32. That was Friday, Friday the 13th. Well, on Monday, WTI jumped higher again and moved near our initial target. It then started to back off. So, we issued an alert to sell the stock for $5.82 and bank a nice 9.19% gain.

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.

To receive a risk-free trial and save 50%, click here now!

3. Covered Call Options Play

Sensus Healthcare Inc. (NASDAQ: SRTS) — Sensus Healthcare Inc. is currently trading at $8.83. The June 17 $10 Calls (SRTS20220617C00010000) are trading at $0.35. That provides a return of about 21% if SRTS is above $10 by the expiration.

Learn more about our Covered Call Tables here!

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