Weekender for 7/10
1. Market Summary
The Nasdaq Approaches the 50-Day Moving Average
– The Nasdaq approaches the 50-day moving average (MA) as semiconductors catch a bid on Samsung’s better-than-feared earnings.
– Defensive stocks stall somewhat, as bids move into multiple areas from growth to industrial. Did someone say the recession was over?
– China’s stimulus plans help boost the market’s trading — Does Chinese stimulus equals an end to the recession in the United States?
– Jobs data were not great ahead of the Jobs Report. The demand for mortgages, automobile delinquencies and other worries are all present.
– Jobs expectations are already lowered. Will the economists miss again? Will the market like upside or downside jobs?
Growth stocks were favored on Thursday, as chips enjoyed some buying after very ugly selling through early Tuesday. They reversed that session, held steady on Wednesday and then gapped higher on Thursday on Samsung’s earnings that were not as bad as feared. That gave hope for the chips going into those Samsung items, but frankly, supply is a key issue, and reports state that supplies are still low.
Nonetheless, a group desperate for good news saw market participants take the story and buy it. With the chips on the upside path, the rest of the growth stocks enjoyed solid gains. Large-cap NYSE stocks rallied as well, but their gains were more following than pushing the action.
NOTE: The figures and information above are from the 7/7 report.
Watch the Investment House Videos For This Week Here!
NOTE: The videos are from the 7/6 report.
2. Targets Hit
Applied Materials, Inc. (NASDAQ: AMAT): We have played AMAT at other times during its drop in Investment House Daily, but this one was a great downside setup. Around mid-June, AMAT sold off and then gapped lower below an old high. It sold off again from there and then rebounded into late June, testing that gap point. On June 27, we saw AMAT show a doji that tapped the old high and lower gap point on the session high. We put it on the report and were ready for the fall.
That happened during the next session. AMAT tried that old high and gap point again, but then started sliding down. That was our signal, and we issued the entry alert to buy September $97.50 put options for $9.50.
That setup, which stalled at multiple layers of resistance, worked perfectly. AMAT gapped lower during the next session and the next after that. It gapped lower again on Tuesday. On Wednesday, AMAT gapped lower to a new 2022 low but held. It then started to climb off the lows. A solid five-session move lower was excellent action. We issued an alert to sell the options at $16.30 in order to bank a 71% gain.
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Deere & Company (NYSE: DE): DE has been in a steady downtrend below the 10-day exponential moving average (EMA) since the rebound in May to early June that tested the 200-day simple moving average (SMA) and stalled into the current downtrend.
We saw DE rising from a decline and show a doji at the 10-day EMA on June 27. A doji at the 10-day EMA in a downtrend is sending a flare up to Technical Traders Alert saying, “Ready to fall!” We were ready, and during the next session, June 28, DE gapped upside and tried to move through the 10-day EMA, but failed.
As DE started sliding back down, we sent an alert to buy August $310 put options for $19.80. As expected, DE sold hard that session and closed at the low. DE continued lower during the following session and again on June 30. DE showed a doji that session, suggesting a bounce was to come.
On Tuesday, DE did bounce, gapping modestly higher to a doji. After that, however, DE gapped lower and sold off, filling the gap from way back in February 2021 that was our target. Yes, gaps do get filled, even if it takes a long time.
DE gapped lower and sold below the gap zone. But it then started to recover. That was enough for us. We issued the alert to sell half of the options for $28.45 and bank a 43% gain.
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JFrog Ltd. (NASDAQ: FROG): In this current market, finding a great pattern upside pattern is a pleasant surprise. After a long decline, FROG showed one of those patterns in the form of a 2.5 month double bottom with handle. The handle had formed at the start of July. We saw it forming, fading that handle to the 50-day EMA and starting a modest bounce Friday ahead of the Independence Day celebration. We did not want to enter on that day, but when FROG hopped higher on Tuesday, we wanted to jump on it.
It didn’t take long. On Tuesday, FROG did jump, and we issued an alert to jump in at $22.29. It had a nice rally during that session and then a Wednesday pause. On Thursday, FROG was up again, hitting our initial target near the prior June peak. So, we issued an alert to sell the stock for $23.34 and bank a 4.7% gain.
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3. Covered Call Options Play
Option Care Health (NASDAQ: OPCH) — Option Care Health is currently trading at $29.22. The Aug. 19 $30 Calls (OPCH20220819C00030000) are trading at $1.65. That provides a return of about 9% if OPCH is above $30 by the expiration.
Learn more about our Covered Call Tables here!
P.S. Mark your calendar now and join us for Eagle Financial’s FREE Online Trading Event: “How the World’s Most Trusted Experts are Trading the Second Half of 2022.” (July 27, from Noon to 5PM Eastern). The event is 100% FREE, and you’ll get to hear firsthand how our 5 Expert Analysts (plus one special guest) explain how they are structuring their portfolios for profit for the rest of 2022 and beyond. Stay tuned for more information on the Big Event.
