1. Market Summary
Excerpted from Thursday’s paid content of Investment House Daily by Jon Johnson.
The Market Tries a Delayed New-Month Reaction
– The market tries a delayed new-month reaction. Indices are up, but they are mixed again.
– We saw new highs for the S&P 500 and the Nasdaq but they lag, again, the Russell 2000 and the S&P 400.
– Jobless claims drop to a post-COVID-19 low, but the number of those on government assistance rises.
– The “experts” say that housing is not in a bubble. That means that it is. Meanwhile, stocks were heading into the jobs report overbought in both the near-term and the long-term. Then again, the Fed is still there.
Thursday was the pause before the jobs report. Certainly, it looked as if the market could celebrate right on up to the Friday jobs report. Futures were up and gained steam after the morning economic data didn’t scare anyone.
Stocks opened higher, surged farther and then their paths split.
The Nasdaq and the S&P 500 peaked about 20 minutes into the session. At that point, they faded until 10:00 a.m. ET. They then held the line for most of the next hour, rallying back near the early highs as the European stock exchanges closed. After that, these two indices dropped into the midafternoon and fell to session lows. A bumpy last two hours of lateral movement gave way to a spurt higher in the last 10 minutes of trading. This allowed them to close in the positive and thus with, yet again, new all-time highs.
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NOTE: The figures and information above are from the 9/2 report.
NOTE: The video is from the 9/1 report.
2. Targets Hit
Here are several completed trades from Investment House Daily, offering insights into our trading strategy and the targets that we have hit this week:
Generac Holdings Inc. (NYSE: GNRC): It is hurricane season, and when the season hits, we always look to see if GNRC, a generator maker, has a good setup we can play. In early August, GNRC was testing the 50-day moving average (MA) after a good move from June. This was the kind of setup we were looking for. So, we decided to get in and let the storms come.
On Aug. 6, GNRC broke higher off of the 50-day MA, and we moved in with November $420 call options for $36.50. GNRC continued higher after that initial move and rallied to mid-July.
Then, we saw a course correction. GNRC tested back to the 50-day exponential moving average (EMA) and to the pullback lows. It found support quickly, however, and bounced nicely higher — forming a quick double-bottom pattern.
After that, GNRC rallied, as a storm was approaching the United States. GNRC rose right into the storm landfall on Aug. 30 and broke to a new high that session. After breaking to the high, however, GNRC started to fade. As it was time to sell, we issued the alert to sell the options at $52.50 in order to bank a 43.8% gain.
We also took gains in the following positions this week:
Microsoft Corp (NASDAQ: MSFT): We sold the rest of the position for a 146% gain.
Etsy Inc. (NASDAQ: ETSY): We sold the rest of the position and banked a 51% gain.
Goldman Sachs (NYSE: GS): We banked a modest 24% gain.
MaxLinear, Inc. (NYSE: MXL): We banked a 48% gain.
Peloton Interactive Inc. (NASDAQ: PTON): We banked a 24.7% gain.
Here are several completed trades from Technical Trader Alert, offering insights into our trading strategy and the targets that we have hit this week:
Alphabet Inc Class A (NASDAQ: GOOGL): The last rally was the classic setup that we have seen on this long rise in the stock indices: a test of the 50-day MA by the major large-cap indices. Of course, when the large-cap indices test, this means that the mega-caps that control the index prices have to test as well.
GOOGL was one of those, and we saw a 20-day EMA test forming up starting on Aug. 18. On Aug. 19, GOOGL gapped lower to the 20-day EMA and then rebounded to positive. After it went on the report, we moved in when GOOGL bounced upside. We bought October $2750 calls for $86.40.
As is often the case with these classic, repeated patterns in the index moves, GOOGL stepped right up off of the 20-day EMA as stock buybacks moved the market back upside. There were four moves higher, a pause and then GOOGL generated a strong upside session on Aug. 27.
GOOGL then rallied again on Aug. 30, but it then started to back off the early move higher. That was our first sell signal. We issued the alert to sell half the options for $182.90 in order to bank a 111% gain.
GOOGL was somewhat flat during the next session, but then it rallied well on Sept. 1. It then started backing off again after a new high. We issued the alert to sell another half of the options for $195.10 in order to bank a 125% gain.
On Thursday, the market was pensive ahead of the jobs report. Since we had a good run higher and GOOGL was starting to waffle, we took the rest of the gains by issuing an alert to sell the rest for $181.70. This generated a 110% gain.
We also banked gains in the following positions this week:
Facebook Inc. (NASDAQ: FB): We banked a 52% gain in the call options.
Atlassian Corporation PLC (NASDAQ: TEAM): We banked a 52% gain in the call options.
DigitalOcean Holdings Inc. (NYSE: DOCN): We banked a 30% gain in the call options.
Here are several completed trades from the Success Trading Group, offering insights into our trading strategy and the targets that we have hit this week:
Kroger Co. (NYSE: KR): We went back to the well for KR, because it had set up such a great entry. We just had to take advantage of it again.
After a nice bounce off of the 10-day EMA, KR peaked during the last week of August. It then faded to the 10-day EMA and held. On Aug. 30, KR started back up off of the test. So, we bought stock for $46.28. KR then bounced a bit more, tested on Sept. 1 and then surged. We sold the position for $47.96 and banked a 3.6% gain.
We also banked gains in the following positions:
MaxLinear, Inc. (NYSE: MXL): We banked a 4.72% gain in the stock.
Palantir Technologies (NYSE: PLTR): We banked a 5.02% gain in the stock
Now is a good time to become a member of the Success Trading Group. The system is geared towards bringing you consistent, short-term gains of 5-10% and you can expect four to six trades every month.
3. Pick of the Week
JPM (JP Morgan — $159.72, -0.22)
STATUS: After a run higher off of the 50-day SMA test in mid-August, JPM spent this week testing back to the 10-day EMA. However, the stock showed a doji on Tuesday and Wednesday, as it still holds a three-month base. We are looking for a new break higher, and the initial target is near the late May peak. A rally to that point will give us a 55% gain in the options.
VOLUME: 8.73M Avg Volume: 10.962M
ENTRY POINT: $160.81 Volume=1.2M Target=$167.97 Stop=$158.48
POSITION: JPM NOV 19 2021 $160.00 Calls — (53 delta)
4. Covered Call Options Play
The Bancorp Inc. (NASDAQ: TBBK) — The Bancorp Inc. is currently trading at $24.31. The Sept. 17 $25 Calls (TBBK20210917C00025000) are trading at $0.30. That provides a return of about 8% if TBBK is above $25 by the expiration.