Weekender for 8/6
1. Market Analysis
- Downside pressure continues post-downgrade as data add to unease.
- As with the last debt downgrade, stocks show resilience after less than two sessions
- Bonds sell, yields rally, oil spikes, more Fed emergency borrowing, and then the Bank of Japan makes an “unscheduled” bond purchase — Japan again starting the central bank buying as it did on July 27?
- Data add to investor worries, as labor stats remain strong as the market awaits the July jobs report.
- All indices hold a support level on the Thursday selling, but it is now about the Friday jobs report.
- Even if the data spook stocks, we anticipate central banks again buying bonds if the United States 10-year yield tops 4.2% – 4.3%.
- Apple revenues miss for a third quarter while Amazon web services rebound sharply: a split in the big names at a critical time in the earnings season.
- Already some areas are showing nice consolidation patterns and indeed started higher in a down tape.
Bonds sell, yields rally, oil resumes the rally (Saudi extends, will “deepen” production cuts), credit card and overall consumer debt hit all-time highs, the Fed Bank Term Funding Program (BTFP) emergency facility hits another all-time high, freight volume fell in Q2, the most since the pandemic’s start. As you would expect, stocks fell, but … they rebounded. Indeed, after a low roughly an hour into trade stocks bounced and rallied to midday. They could not hold the move, fading in the afternoon session, but they closed well off the session lows with modest losses for most, while the DJ20 transports scratched out a very modest gain.
NOTE: The figures and information above are from the 8/3 report.
MARKET VIDEOS
NOTE: The video is from the 8/2 report.
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2. Targets Hit
Technical Trader:
The market has put in a good run, and with the help of a volatile bond market, has shown some volatility as well. Volatility is a sign a move is approaching its end, but on the flip side, the moves do become exaggerated and you can bank some excellent profits on the moves. That volatility again provided us with great opportunities to profit from a wide range of sectors. Below are some gains we banked this week:
Adobe Inc. (NASDAQ: ADBE): 118% gain in the options
Emerson Electric Co. (NYSE: EMR): 80% gain in the options
Tempur Sealy International Inc. (NYSE: TPX): 30% gain in the options.
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3. Covered Call Options Play
Amphastar Pharmaceuticals Inc. (NASDAQ: AMPH) — Amphastar Pharmaceuticals Inc. is currently trading at $63.08. The Aug. 18 $65 calls (AMPH20230818C00065000) are currently trading at $2.80. That provides a return of about 9% if AMPH is above $65 by the expiration.
