Weekender for 7/24
1. Market Summary
Stocks Volatile in the Morning
– Stocks volatile in the morning, then the bids hit again.
– Indices finish at session highs as the third rally leg extends to over a week for some indices.
– A broad move across many sectors, as individual stocks move to and through the 50-day moving averages (MAs).
– Initial claims jump, continuing claims rise.
– Philly Fed significantly worse than expected.
– Bad data drives higher stock prices as the “Fed will have to add liquidity” mindset continues.
– Stocks a bit extended on this move and a test could start at any point, though there were no significant cracks Thursday.
– SNAP earnings may be the trigger to start the test of the 50-day MA breakout.
There was some back and forth on the session with weakness the first hour, but bids returned for a rally to new recovery highs into early afternoon, a pause, then a sprint higher to the close. Once again another solid upside session with NASDAQ and PHLX Semiconductor Sector (SOX) leading.
NOTE: The figures and information above are from the 7/21 report.
Watch the Investment House Videos For This Week Here!
NOTE: The videos are from the 7/20 report.
2. Targets Hit
Crocs, Inc. (NASDAQ: CROX): The market is showing the following pattern quite a bit leading into this recent rally off of the lows: a downtrend that pinched off in May and June, as stocks put in consistent lows. This action formed some double bottoms, some triangle patterns and some inverted head-and-shoulders patterns — all accumulation bases.
CROX formed a triangle, and it broke higher in early July to the top of the pattern. It made the break but immediately tested back into the middle of the month. The stock held at the 20-day EMA, moved laterally and set up the resumption of the breakout move. Upon seeing this, we put the play on the report.
On July 20, CROX made the move we were looking for — breaking higher over the 50-day exponential moving average (EMA). We issued the alert to buy September $55 calls at a price of $8.30. CROX was trading at $58.38 at that time and posted a nice rally that session to close at $62.61.
CROX added some more upside on Thursday and Friday, gapping modestly higher. After rallying to $65, however, CROX started to falter. The stock is likely due for a bit of a test, as this leg of the market rally is over a week strong.
With CROX fading off an early move to a doji, we issued an alert to sell half the position for $12.60 and a 51% gain. For the other half, we will see if CROX makes a short test and then resumes the nice breakout rally.
Palantir Technologies Inc. (NYSE: PLTR): Improving patterns across the market had us looking for stocks that were breaking back upside from their downtrends. Of course, if we can find quality stocks with good patterns at lower prices for Rapid Profits Stock Trader, all the better. That is why PLTR caught our eye.
As with many stocks, PLTR trended lower and lower and lower from a peak back in the second half of 2021. PLTR moved up off the lows from May to test the 50-day MA in June — just as it did in April. This time, however, instead of failing and falling away from the 50-day MA, PLTR broke through in early July. After the initial day higher, it did not move much. Then, it came back to test the breakout. THAT is the action that would set up a buy.
PLTR faded for almost two weeks before coming back to the 50-day simple moving average (SMA) and the trendline from November 2021. It worked laterally for three sessions, and then showed a bump higher. That had us ready.
On Wednesday, July 20, PLTR gapped higher to the 50-day EMA. That was our signal, and we issued the alert to buy the stock at $9.72. PLTR closed out the session at $10.11. This was a good start.
During the next session, PLTR gapped higher again and rallied from there. This time, however, PLTR started to waffle and came off of the early momentum higher. We issued an alert to sell the stock for $10.61 and a 9.1% gain.
We also took a gain in the following position:
Blink Charging Co. (NASDAQ: BLNK): We sent out an entry alert on July 20 for $18.60. We sent out a sell alert on July 21 at $19.95 and banked a 7.2% gain.
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3. Covered Call Options Play
Vita Coco Company Inc. (NASDAQ: COCO) — Vita Coco Company Inc. is currently trading at $11.99. The Aug. 19 $12.50 Calls (COCO20220819C00012500) are trading at $0.75. That provides a return of about 12% if COCO is above $12.50 by the expiration.
