Invest and Trade Profitably with Jon Johnson

Weekender for 9/18

1. Market Summary

Some Indices Slide Below the September Lows

  • Some indices slide below the September lows, others are testing them — the day was disappointingly undecisive.
  • Economic data disappoint as retail sales belie the top line number — it is all inflation anyway.
  • Gold bombs below support.
  • FedEx Corporation (NYSE: FDX) withdraws yearly guidance afterhours, market participants withdraw their funds.
  • Will FDX lead to a break of the September lows ahead of the weekend, putting some charge back into a suddenly quiet market?

Down, but not a downside washout. Thursday more disappointing data from retail sales, regional producer management indexes (PMIs), production and capacity added to the downside pressure, but it was more of lethargy than sharp selling. DJ30 sagged through the early September lows along with Nasdaq 100 and PHLX Semiconductor Sector (SOX), but again, not sharp breaks. At the same time, the S&P 500 and the Nasdaq are both testing the early September lows. The mid-caps and small-caps moved higher, but they hit resistance at the 10-day exponential moving average (EMA) and faded to losses.

IMPORTANT ANNOUNCEMENT: We are having our first Eagle Virtual Trading Event on Thursday, Sept. 29.  If you haven’t signed up for this yet, there’s still time. Just click here now to sign up for free. Believe me, you won’t want to miss this LIVE online event — as we will bring together all five of Eagle’s investment experts at the same time (plus one special guest speaker) to reveal our 6 Ways to Create 4th Quarter Fortunes.  Reserve your seat now by clicking here.

NOTE: The figures and information above are from the 9/15 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 9/14 report.

2. Targets Hit

Visa Inc. (NYSE: V): After the June to July rally, V had recovered just over the June peak. After the four week move, it needed to consolidate, and over the next four weeks, it built a trading range over the 50-day moving averages (MAs). It peaked mid-August at the late July peak — double top perhaps?  It sold back to the bottom of the range, right to the 50-day simple moving average (SMA).  It bounced, but this time it was out of gas. V bounced but stalled below the 200-day SMA and reversed rather spectacularly on Aug. 26, closing below the 50-day SMA.

After such a drop, we anticipated a rebound that Investment House Daily could use to enter. Well, it did not come the next session, as V slid a bit lower, but it did move up off the opening low. The next session, V gapped upside to test that break of support. Thing is, it never got the chance to really test because it reversed intraday. Love intraday reversals off resistance, and we used that to issue the alert to buy October $200 put options for $8.05.

V slid lower from that reversal for four sessions, but then the market had that four-day bounce that the talking heads were saying was proof the bottom was in. Until it wasn’t, just as in March ,when one called the end of the bear market. Sure.

After that bounce to the 50-day EMA showing a hanging-man doji screaming at you, V gapped lower Tuesday and cascaded to a low Friday matching the May lows. We issued the alert to sell half the options for $12.74 and a nice 58% gain. Now, we will see if V pauses to relief bounce a bit, then resume the move lower.

We also took a gain in the following play:

Nordic American Tanker Ltd. (NYSE: NAT): 22.6% gain in the stock, 68.8% gain in the options.

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Lam Research Corporation (NASDAQ: LRCX):  LRCX put in a short double-top the first half of August, failing an attempt to break through the June peak. It quickly dropped to the 50-day SMA, bounced to the 50-day EMA, but then immediately reversed to close just below the 50-day SMA.  That had us looking for a further move lower. The following Monday, LRCX continued lower from that sharp Friday reversal.

That was our entry signal, so we issued a note in Technical Trader Alert to buy October $450 put options for $34.30. LRCX sold the next four sessions in a steady decline. It then bounced to test, working laterally for three sessions then bouncing to test the 20-day EMA. Showed a doji there, and sure enough on Tuesday LRCX gapped lower to the recent lows.

It continued lower into Friday, hitting the initial target. We issued the alert to sell half the position with the option bidding for $51.30, a 50%ish gain. We took half the position, given the market is very weak and we like to take partial profits as a way to let a winner run while relieving the pressure and worry of losing anything on the trade with a sudden reversal.

That allows you to turn a very good trade into a great trade — coincidentally the topic of my upcoming discussion at the Sept. 29 Eagle Virtual Trading Event.

We also booked gains in the following positions:

Adobe Inc. (NASDAQ: ADBE): 82% gain in the options.

Mastercard Inc. (NYSE: MA): 39% gain in the options.

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3. Covered Call Options Play

Sensus Healthcare Inc. (NASDAQ: SRTS) — Sensus Healthcare Inc. is currently trading at $14.23. The Oct. 21 $15 Calls (SRTS20221021C00015000) are trading at $0.80. That provides a return of about 13% if STRS is above $15 by the expiration.

Learn more about our Covered Call Tables here!

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