Weekender for 7/23
1. Market Analysis
- Stocks gap lower as tech and chip earnings pressure the market.
- Techs, chips sell hard, most other areas quite contained.
- Existing home sales fall again as inventory is blamed.
- Philly Fed negative but shows some progress.
- Bank Term Funding Program (BTFP) hits a new record (ho-hum) as banks continue borrowing from the Fed to fund recovery investments.
- We banked more gains, closed some that took turns south, but many plays work well as we have moved toward the less extended areas.
- Expiration Friday likely has more issues for techs and chips, but we are still watching the industrial side for opportunity.
Stocks fell from the Wednesday doji with Nasdaq and PHLX Semiconductor Sector (SOX) unsurprisingly leading the downside given the action of Tesla and Netflix, as well as Taiwan Semiconductor’s terrible results for the semiconductor sector. The Nasdaq indices fell to the 10-day exponential moving average (EMA) while SOX gapped through the 10-day EMA and sold to close just below the 20-day EMA. Some serious struggles for those indices while the rest of the market showed well-contained tests, with the DJ30 actually managing a positive close.
NOTE: The figures and information above are from the 7/20 report.
MARKET VIDEO
NOTE: The video is from the 7/19 report.
P.S. My colleague, George Gilder, will be hosting a teleconference on July 26 at 2 p.m. EST — and you’re invited! The title of the conference is “How to Profit from the Next S&P500 Companies” and it is free. However, you have to register here to be able to attend. Don’t miss out!
P.P.S. Come join me and my Eagle colleagues on an incredible cruise! We set sail on Dec. 4 for 16 days, embarking on a memorable journey that combines fascinating history, vibrant culture and picturesque scenery. Enjoy seminars on the days we are cruising from one destination to another, as well as dinners with members of the Eagle team. Just some of the places we’ll visit are Mexico, Belize, Panama, Ecuador and more! Click here now for all the details.
2. Targets Hit
Investment House Daily:
Earnings season and options expiration made for a more volatile week. When we get to these periods, we use them to capture the pre-earnings runs as well as bank gains as the numbers start to emerge. We enjoyed another solid week in the process.
Match Group Inc. (NASDAQ: MTCH): 84% gain in the options.
Netflix Inc. (NASDAQ: NFLX): 97.5% gain in the options.
NXP Semiconductors NV (NASDAQ: NXPI): 425% gain in the options.
ON Semiconductor Corp. (NASDAQ: ON): 41% gain in the options.
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Technical Trader:
Earnings make for an interesting period, and it is not just getting a look at the corporate earnings picture. The market treats earnings season several ways depending upon how the market is trending. In the current market, the overall bias since the Fed instituted its BTFP emergency bank facility and started backdoor quantitative easing (QE), is higher. Thus, the pre-earnings period offered the perfect opportunity to play a ramp higher into results. That is precisely what has happened, and of course we were taking advantage of the pre-earnings moves.
Arista Networks Inc. (NYSE: ANET): 60% gain in the options.
Crocs, Inc. (NASDAQ: CROX): 40% gain in the options.
Deere & Company (NYSE: DE): 72% gain in the options.
Tempur Sealy International Inc. (NYSE: TPX): 55% gain in the options.
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3. Covered Call Options Play
Triumph Group Inc. (NYSE: TGI) — Triumph Group Inc. is currently trading at $12.19. The Sept. 15 $12.50 calls (TGI20230915C00012500) are currently trading at $0.70. That provides a return of about 9% if TGI is above $12.50 by the expiration.
