1. Market Summary
Excerpted from Thursday’s paid content of Investment House Daily by Jon Johnson.
The Nasdaq Drags the S&P 500 to a New High
– The Nasdaq drags the S&P 500 to a new high, and the PHLX Semiconductor Sector (SOX) and Russell 2000 (RUT) are not far off. The Nasdaq is leading, but not all stocks are following. Some are fading.
– The economic data reveal nothing new. Indeed, they show a bit of weakness.
– A strong, seven-year bond auction asks, “What inflation?”
– The Fed is focused on employment over inflation, but is employment at this time not a controlled market?
Late Wednesday, Robert Steven Kaplan appeared again and predicted interest-rate hikes in 2022. Stocks fell into the close. On Thursday, that sentiment was gone. More soothsaying by other Fed officials told investors to ignore the man behind the curtain and that its story of no interest-rate hikes was the correct one. Heck, it just might be.
As I have said, the game in D.C. and at the Fed regarding if the collapse will occur is “not on my watch.” Ben Bernanke, Janet Yellen and Jerome Powell all dabbled with interest-rate hikes and quickly abandoned them when the markets kicked back. We cannot have a loss of confidence in a chronically weak system that survives because the stock market perpetually rises, regardless of economics. Printing more money will keep things floating over the rocks, but it will only kick the can down the road.
It worked again. The Nasdaq punched a new high, and the S&P 500 recovered its new high. The SOX and RUT are close to new highs as well.
NOTE: The figures and information above are from the 6/24 report.
NOTE: The videos are from the 6/23 report.
2. Targets Hit
Here are three completed trades from Investment House Daily, offering insights into our trading strategy and the targets that we have hit this week:
Bilibili Inc — ADR (NASDAQ: BILI): The furor over China was dying down and Chinese stocks were sporting some good patterns. BILI was already in a base that started in February, and after a low in mid-May, the stock recovered and formed an inverted head-and-shoulders shape inside the larger pattern.
In early June, BILI gapped over the 50-day moving average (MA). We did not chase it on that move, but we did wait for the test. Sure enough, BILI came back to test the 50-day exponential moving average (EMA) and stayed in a lateral move for a week. We put it on the report in order to be ready to play the break higher. On June 10, the stock broke upside.
We entered the play by buying July $110 call options for $7.75 per option. BILI moved up nicely from there, and then fell back to test again. It bounced nicely once more and moved up for three sessions. Then, it faded again and fell to a doji at the 50-day EMA on Tuesday.
From there, however, BILI caught a better bid. It rallied into Friday and cleared the mid-base peak from April. As that was our initial target, we sold half of the position for $16.30 and banked a 110% gain. We will see if it can continue higher, and we will be ready to take more gains.
We also took gains in the following positions this week:
Microsoft Corporation (NASDAQ: MSFT): 81% and 100% gains in the July call options.
Patterson-UTI Energy, Inc. (NASDAQ: PTEN): 20% gain in the stock and a 59% gain in the call options.
Here are three completed trades from Technical Trader Alert, offering insights into our trading strategy and the targets that we have hit this week:
Chipotle Mexican Grill, Inc. (NYSE: CMG): These calls were pricey, but this stock is a performer that was set up to make us some money. After a second peak in April that matched the February peak, CMG was set to fall from a double top. It did.
CMG sold from $1,579 down to $1,300 by mid-May. That was the bottom of the range that was established by some prior lows from January and March, and CMG used them to bounce.
After it set up a double bottom off of the May and June low and formed a handle at the 200-day simple moving average (SMA) in mid-June, we put the play on the report. The fact that CMG broke higher from the handle on June 21 was our entry signal.
The September $1,430 calls were selling for $81, and CMG put in a good move during that session. In fact, it closed near the session high. CMG enjoyed a nice breakout and then rallied from the breakout on Monday up to resistance at $1,500, as of Friday.
This was a nice run over the course of the week. CMG was showing a doji at that resistance. Since that was the initial target, we sold the calls for $115.40. This generated a 42% gain.
We also took gains in the following positions.
Intuitive Surgical, Inc. (NASDAQ: ISRG): 22% gain in the options.
Zscaler Inc. (NASDAQ: ZS): 99% gain in the options.
Here are three completed trades from the Success Trading Group, offering insights into our trading strategy and the targets that we have hit this week:
Oil States International, Inc. (NYSE: OIS): OIS has been good to us before, and when we saw the base set up in early June, we were going to give OIS an opportunity to be good to us again… if it made the move. Well, on June 10, it did.
OIS took part in a one-and-a-half-week-long pullback to the 10-day EMA and remained in a very tight lateral move. On June 10, it moved to the upside with a breakout move. We bought the stock for $8.10.
OIS continued higher during the next session and hit the initial target. The stock was moving so well, however, that we decided to wait. Then, OIS gave back much of the move during that session. Over the next two sessions, it faded back to the 10-day EMA.
It held there and bounced back upside the following Monday. At this point, it hit the target again. You know what? We took the 4.3% gain.
We also banked the following gains over the past week:
Upwork Inc. (NASDAQ: UPWK): 4.9% gain.
Urban Outfitters, Inc. (NASDAQ: URBN): 3.9% gain.
Still, 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.
3. Pick of the Week
FSLY (Fastly, Inc. — $57.13, +0.85)
STATUS: FSLY is putting in a good comeback effort. It gapped lower from a two-and-a-half month basing attempt in early May. It then recovered into the second week of June and filled the gap. Over the past two weeks, FSLY has been working laterally at the 50-day MA.
It has been tightening up in a narrow range over the past week and is looking for a good break higher. When it holds the move, we want to move in for a run at filling the gap lower from the last week of April. That move will give us an 80% gain in the options.
VOLUME: 3.124M Avg Volume: 5.913M
ENTRY POINT: $59.61 Volume=8M Target=$69.96 Stop=$56.28
POSITION: FSLY SEP 17 2021 60.00 Calls — (50 delta)
4. Covered Call Options Play
Organogenesis Holdings Inc. (NASDAQ: ORGO) — Organogenesis Holdings Inc. is currently trading at $16.92. The July 16 $17.50 Calls (ORGO20210716C00017500) are trading at $0.20. That provides a return of about 9% if ORGO is above $17.50 by the expiration.