Weekender for 6/25
1. Market Summary
Plenty of Good Setups
- On the fourth day, techs started to rebound.
- Plenty of good setups in the market. After the fade, will they follow the leaders once more?
- Some big houses still calling for a selloff, but this far the technical action and pattern setups are bullish.
Pullback day 3.5. Day one of the rebound? Chairman Powell was delivering day two of his congressional testimony and stocks were once again lower, now for a fourth straight session.
NOTE: The figures and information above are from the 6/22 report.
MARKET VIDEO
NOTE: The video is from the 6/21 report.
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2. Targets Hit
Investment House Daily:
NVIDIA Corp. (NASDAQ: NVDA): NVDA gapped sharply upside on its earnings, too big of a gap to chase until we saw how the stock handled the surge. What we like to do is what I call counterpunch after an earnings move — up or down. NVDA’s gap was a powerful, breakaway gap. Those gaps tend to rise a bit more and then consolidate laterally before resuming the move higher. Thus, we were watching for the consolidation and a good point to enter to catch the next move higher and to let the options volatility die down so we capture a better gain.
Sure enough, NVDA started to test into June, coming back to test near support at the 10-day exponential moving average (EMA). On a big gap, the 10-day EMA will often be the catalyst for the next move higher. Thus, on June 9, when we saw NVDA break upside, we issued the alert to buy September $395 call options trading at $42.07 on the ask.
NVDA moved steadily higher ahead of the 10-day EMA. The Federal Open Market Committee (FOMC) was due to issue its decision on Wednesday, June 21. A nice rally off the gap test, the overall market showing a solid move as well, ripe for a bit of upset if Chairman Powell did not tap dance well enough.
We opted to take part of the gain so we issued an alert to sell half the position with the options bidding $58.75. That produced a very decent, defensive 39+% gain, and now we are letting NVDA test with the market. We may get us a new entry out of this test as well.
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Rapid Profits Stock Trader:
SoundHound AI Inc. (NASDAQ: SOUN): SOUN is considered one of the artificial intelligence (AI) stocks, so, of course, there was interest in the stock. That said, the interest was somewhat muted versus other AI stocks — SOUN was working in a five-month base after peaking at $5.00 in February.
We like quiet — the quiet before the storm. Stocks will work through a base under accumulation, not making much movement other than sideways. What we do is evaluate the pattern and determine when the stock is near the breakout point. Then we put it on the play list and are ready to make the trade when the stock moves.
SOUN was working through its base when it tapped down to the 200-day simple moving average (SMA) and held, putting in a higher low. Quiet trading on the dips, a bit better volume on the rises. SOUN then made a break over the April highs in the base.
We let SOUN test the break higher, then when it started back up, we issued the alert to buy the stock with the ask at $3.18. SOUN moved a bit higher but then dipped into early June. It held near support and then started back up off a new higher low.
The stock steadily moved higher into this week, surging upside on June 20. That took SOUN to a gap point from back in February, and we issued the alert to sell the position as the stock bid at $3.91 and a solid 22.9% gain.
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3. Covered Call Options Play
Rambus Inc. (NASDAQ: RMBS) — Rambus Inc. is currently trading at $59.06. The Aug. 18 $60 calls (RMBS20230818C00060000) are currently trading at $3.70. That provides a return of about 9% if RMBS is above $60 by the expiration.
