Invest and Trade Profitably with Jon Johnson

Weekender for 9/20

1. Market Summary

No “opposite day” for stocks following Wednesday’s post-FOMC selloff. 

– No “opposite day” for stocks following Wednesday’s post-Federal-Open-Market-Committee (FOMC) selloff. Sharp gaps lower, then some recoveries.
– Initial jobless claims still 800K+, perplexing experts. The answer is, however, quite obvious if you just look at what is happening versus the hallowed “data.”
– Some solid action in recovery stocks, some interesting action in semiconductors and other techs.
– Expiration Friday makes new entries problematic, but the market action suggests the selling episode may be near its end.

After rallying to the recovery highs and Sept. 4 gap point on the Tuesday close and opening there Wednesday, the indices sold back from that level Wednesday and then continued lower Thursday. Futures opened lower, remained lower through the premarket, then the indices gapped lower to start the day. So much for “opposite day,” i.e. where the market does one-way post-FOMC then the next session heads the other way.

Stocks did open lower but then surged upside from the open. Looked promising. At the European close, however, stocks tumbled back down to the lows right at the open. Over the next three hours,  stocks moved higher and then right back down to the lows to close the penultimate hour. Then they rallied back up to the close. Not enough to hit the midmorning highs, and certainly not enough to turn the indices positive — though SOX was darn close — but well-off the lows.

Technical Analysis: 

NYSE volume faded on the selling, Nasdaq trade held roughly the same and below average on its selling.

NOTE: The figures and information above are from the 9/17 report.

Watch the Investment House Video For This Week Here!

NOTE: The video is from the 9/17 report.

2. Targets Hit

We’ve had several completed trades this week in Investment House Daily; below is one such trade:

Tesla, Inc. (NASDAQ: TSLA): After the quick drop in early September, TSLA found the 50-day exponential moving average (EMA) on Sept. 8. A strong stock, a good run, just split and testing back to solid support. We put it on the report that night, and when TSLA bounced back upside on Sept. 9 we moved in to play a rebound off the 50-day moving average (MA).

We purchased November $356.00 strike call options (you get those strange strikes with a five-to-one split) for $68. TSLA reacted pretty much as anticipated. It was up the next session but off the high on the close. It then paused one session before a surge higher on Sept. 14. A gap higher on Sept.15 kept TSLA in a strong move. On Wednesday, Sept. 16, TSLA was a bit soft. We opted to go ahead and bank some gain, selling half the options for $123.60 and an 80+% gain. Now we see if TSLA can close out a run to the prior high.

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We’ve had several completed trades this week in Technical Traders Alert; below is one such trade:

Sunrun Inc. (NASDAQ: RUN): While the early September selling touched almost all stocks, many solid stocks touched the 50-day EMA on that selling and bounced right back up. RUN showed this same action. After an intraday tap at the 50-day EMA on Sept. 4, the next session, RUN gapped lower but reversed for a gain.

We put it on the report, and on Sept. 9, as RUN continued upside, we moved in with stock at $54.78 and November $55.00 call options for $8.75. This was pretty easy running, so to speak, as RUN was up five out of six sessions, hitting our initial target on Aug. 16 with a gap upside, a run, then a stall. We sold half the stock for $63.27 and a 15.5% gain. We also sold half the November options for $12.70, banking 45%.

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We’ve had several completed trades in Success Trading Group; below is one such trade:

JinkoSolar Holding Co., Ltd. (NYSE: JKS): The early September pullback put a wrench in a lot of moves, but after a quick down, many put in a quick rise back up. JKS was one of those. We entered this play on Aug. 18 as JKS broke higher from an inverted head-and-shoulders pattern.

We bought the stock for $22.78 as the stock made a solid break higher on an excellent volume surge. JKS continued upside, but it was not straight-line. It rallied and tested, using the 20-day EMA as support. It was getting close to our target when the early September selling hit. JKS fell quickly to the 200-day supplemental moving average (SMA), then, just as quickly reversed. By early week, JKS was back to the prior highs. Friday, JKS made a break past the highs of the past month and hit our buy in the process. We sold the stock for $24.34, banking a nice 6.85%.

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3. Pick of the Week

ROKU (Roku, Inc.–$168.52, +10.79)

EARNINGS: 11/04/2020

STATUS: ROKU had a nice breakout late August from a 7-week range, moving to a new all-time high — a series of them — into early September. Then the early September drop to the 50-day EMA. Tapped the five-day and bounced, then rolled back down to it Friday, putting in that short double-bottom many have put in at that level in this drop. A nice doji Monday, then gapping upside over the 20-and-10 day EMA Monday. Volume jumped above average after a lot of below-average volume on the selling and the lateral move this past week. Indeed, the higher volume was on upside sessions, and that shows buyers stepping in. We want to move in as ROKU continues higher. A run to that target gains 50+% on the options.

Volume: 10.201M Avg. Volume: 8.186 million

ENTRY POINT: $169.21 Volume=10 million Target=$189.97 Stop=$164.63

POSITION: ROKU NOV 20 2020 170.00 Calls – (55 delta)

To see the chart for ROKU, click here!

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4. Covered Call Options Play

IGM Biosciences, Inc. (NASDAQ: IGMS) — IGM Biosciences, Inc. is currently trading at $78.88. The Oct. 16 $75 Calls (IGMS201016C00075000) are trading at $13.50.

Learn more about our Covered Call Tables here!

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