Weekender for 8/13
1. Market Analysis
- Consumer Price Index (CPI) cooler and hotter. Market rallies early, then pitches it away.
- Mixed close as stock indices surge and purge, holding at the same support.
- More than just CPI: Bank Term Funding Program (BTFP) usage increases, sloppy 30-year treasury auction, hardship retirement loans surge.
- With the Strategic Petroleum Reserve all but drained, Biden strikes a deal with Iran.
- Weak intraday action, but stocks hold the same support — will the Fed be needed to goose the upside from here to keep the rally going?
Futures showed no CPI fear, as DJ30 and Nasdaq boasted premarket gains well in excess of 100, 200 for the Dow. The CPI came out hotter and colder, stocks hesitated, up then down but holding their gains into the open.
NOTE: The figures and information above are from the 8/11 report.
MARKET VIDEOS
Market Summary
Technical Summary/Next Session
NOTE: The video are from the 8/10 report.
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2. Targets Hit
Investment House Daily:
Arhaus Inc. (NASDAQ: ARHS): Nice, steady gains in a volatile market are always a plus. After the great run higher into July, the market was a bit overdone and needed a deeper test. Still, this market that is juiced by “emergency” bank funding via the Federal Reserve and bond buying to keep rates from shooting higher, continues to produce new leadership groups and stocks as the excess capital pushes into stocks.
Retail is an area producing winners in some of its segments, and when we saw ARHS, an eclectic home furnishings chain, set up a cup with handle base from March into July, we were, of course, ready to make the play.
ARHS broke higher the second week of July, clearing the handle in the base that formed just over the 200-day SMA after it gapped over that level almost two weeks earlier. We let the initial break make its move, and readied for a test — when the market gets a bit overdone, we like to see if a breakout holds. A test of the breakout that then resumes the move is a nice “proof” of the breakout. Thus, when ARHS broke higher on July 17, it showed that new buyers were entering even at a higher price than the breakout — there you go.
We issued the alert to enter with the stock trading at $11.24. We liked the potential return on both the stock and options and thus the alert gave the entries for both. The stock ask was $11.24, as noted, and the August $10.00 call options were asking $1.67.
ARHS rallied off that entry alert for a few sessions, then tested that move back to the 10-day EMA and 20-day EMA. All the while, ARHS continued to move higher, putting in higher lows at the near support. After a test of the 20-day EMA with a doji with tail on Aug. 8, ARHS gapped higher the next session, touching our initial target, a fill of the gap lower from March that started the base. We issued the alert to sell stock bidding $12.76 and options bidding $2.72 for a 13.5% and 60% gain, respectively.
ARHS is now testing that break higher, and if it holds a test of the near support again, we anticipate another break higher to try and move through that gap zone. If the conditions and numbers are right, we can play that move as well.
Another play where we banked a gain:
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3. Covered Call Options Play
Vertiv Holdings Co. (NYSE: VRT) — Vertiv Holdings Co. is currently trading at $33.87. The Sept. 15 $35 calls (VRT20230915C00035000) are currently trading at $1.45. That provides a return of about 8% if VRT is above $35 by the expiration.
Learn more about our Covered Call Tables here!
