Invest and Trade Profitably with Jon Johnson

Weekender for 9/10

1. Market Summary

  • Stocks higher early premarket but melt away to losses.
  • Some rebounds once more, but all indices outside DJ30 finish lower.
  • Jobless claims at seven-month lows. Well, okay then.
  • Indices in various degrees of failure.
  • Still solid patterns in some sectors: too-big-to-fail tech, software, oil and gas, manufacturing/machinery.
  • Some indices hanging in at support as they try to avoid the ABCD-downside breakdown.

After the rather solid Wednesday action with the indices testing lower and rebounding to recoup some gains, the setup was good for the indices to bounce. A good setup, but it did not take. Futures were higher very early, then the sellers emerged again, pushing stocks lower premarket.

Apple did not help thanks to China expanding its prior ban of iPhones in certain instances in government offices.  The selling further accelerated post-data (productivity, unit labor costs, jobless claims) into the open. The test from Wednesday was to be tested again. It was to varying degrees of success or failure. More failure than success, but it is not a tragedy just yet. It is, for sure, September.

NOTE: The figures and information above are from the 9/7 report.


Watch them here!




NOTE: The videos are from the 9/7 report.

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2. Targets Hit

Investment House Daily:

ConocoPhillips (NYSE: COP): Oil and gas plays are one of the obvious trades in this market where Russia and Saudi Arabia continue to renew their production curtailments and the United States has drained its reserve so has no buffer left to cushion the U.S. consumer and economy from higher prices.

One of the oil and gas stocks we are trading is COP. COP proved to be an early leader for the larger caps, breaking over the 200-day simple moving average (SMA) in the second half of July. After that move, COP faded to test that breakout. We saw it coming back to test and prepped a play for the test and subsequent bounce to play the continuing move.

On Aug. 8, COP gapped lower and tapped the 200-day SMA on the low. It bounced from there as the bids entered at support. We were there as well.  We issues the alert via text and email to buy November $115 strike call options trading at $7.15 on the ask. With the stock trading a bit over $115, this gave us a good slightly in-the-money call with a good price and other metrics. Good pattern, good metrics on the option — the numbers worked.

COP continued higher over the next several sessions, then faded to test the 20-day exponential moving average (EMA).  It held and bounced, starting that ebb and flow you see as stocks climb higher up the 10-day and 20-day EMAs.

On Wednesday, Sept. 5, COP spiked higher after a steady six-session move higher. That spike started with an upside gap that continued higher.  The move, however, started to falter and fade off the high. Seven sessions higher, touching the initial target with a gap and rally that started to fade. Prime time to lock in some of the gain.

We issued the alert to sell half the position trading at $11.10 on the bid, a solid 55% gain. COP is now in an orderly test, waiting for the 10-day EMA to catch up to the price rally. When it does, COP likely starts its next leg higher of this move, and we will let the remaining half position work higher up the 10-day EMA to the next logical target and then we will see if the stock is again showing signs of stalling for another test. At that point, we can take more of the profit.

This is how we trade stocks upside and down: find great patterns, work the numbers to make sure they provide sufficient return. With these two elements on the front end of the trade in our favor, the deck is stacked for us, and when the stock makes the move, we make the play and then work the trade in a logical manner based on the parameters of the pattern while always monitoring the option numbers to make sure they remain in our favor.  This way we can turn a good pattern into several targets hit on the trade where we see a 50% gain turn into a 100% or more gain simply by properly managing the trade on the back end.

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3. Covered Call Options Play

Alpha & Omega Semiconductor Ltd. (NASDAQ: AOSL) — Alpha & Omega Semiconductor Ltd. is currently trading at $29.21. The Oct. 20 $30 calls (AOSL20231020C00030000) are currently trading at $1.20. That provides a return of about 8% if AOSL is above $30 by the expiration.

Learn more about our Covered Call Tables here!

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