Minggu, 10 Januari 2021

Weekend Wrap Up for 01/10/2021

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Investment House Wrap Up
IH Daily
Technical Traders Alert
Success Trading Group
About Jon

In This Issue:

  1. Market Summary
  2. Targets Hit
  3. Pick of the Week
  4. Covered Call Options Play

Weekend Wrap Up for 01/10/2021

by Jon Johnson
Editor,
Investment House Daily, Technical Traders Alert, & Success Trading Group

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1. Market Summary
Jon Johnson

Excerpted from Thursday’s paid content of Investment House Daily by Jon Johnson.

Stocks Surge Higher

– Stocks surge higher, and the NASDAQ and PHLX Semiconductor Sector (SOX) are leading the move.
– The market is ignoring all bad news and is focusing on more stimulus in 2021.
– Economic data continue to slow their spurt higher, but all that means is more stimulus.
– We saw some great surges upside, but some indices are extended. Furthermore, some actions are reminiscent of what we saw in early 2000. With some caveats, we will still play the good moves.

It is Christmas all over again, or at least it feels like it. There was $900 billion in stimulus in late 2020, and now there is talk of another $750 billion in early 2021 under a new administration. Yes, the experts expect such a bill to pass in February and send the economy "surging".  It’s just money. We can always print more...

Stocks started higher with the NASDAQ leading, as it played catch-up after its laggard performance and bouts of sharp distribution over the past four weeks. It jumped 2.56%, and was outpaced only by another tech group, the semiconductors, and their 3.86% gain.

The economic data were less than great. While jobless claims were greater than expected, they are not surging higher. Institute of Supply Management (ISM) services topped expectations, but that was due to a parlor trick. The extended delivery times were not because of demand, but because of delays in supply related to COVID-19.

Technical Analysis:

NASDAQ: This was one of the important breaks, largely due to the fact that the NASDAQ, after a sharp drop to the 20-day exponential moving average (EMA) on Monday, held and then broke to a clean new high. In other words, we saw a nice, clean break past resistance after being a bit on the ropes to start the week.

S&P 500: Here, we saw a nice, strong new break to a new high.

NOTE: The figures and information above are from the 1/7 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 1/6 report.

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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:

Cleveland-Cliffs Inc. (NYSE: CLF): As the industrial metals sector was setting itself up beautifully, we were looking at a handful to play as the market rotated toward industrial recovery stocks. CLF was perfect because it had formed a three-week pennant after a nice mid-November to mid-December run. On Jan. 5, CLF broke higher from the pennant, and we moved in by buying stock for $14.81 and March $14 call options for $2.20. 

These kinds of patterns can yield results in a hurry, and that is exactly what CLF provided. The stock gapped higher on Jan. 6 and surged over $17. On Thursday, CLF surged again, but then started to backpedal. Again, while it can provide fast results, the initial moves also tend to burn out fairly quickly as well. 

As CLF showed a doji on Thursday, we sold half of the position, as we believe that this will be a two-step move. Nonetheless, we wanted to take the good gains in hand. So, we sold half of the stock for $18.18 and banked a 22.75% gain. We also sold half of the options for $4.60 and banked a 109% gain.

Over the course of the week, we also banked gains on the following plays:

Applied Materials, Inc. (NASDAQ: AMAT): 47% gain in the options

Century Aluminum Co. (NASDAQ: CENX): 24% gain in the stock, 116% gain in the options

Eaton Corporation PLC (NYSE: ETN): 152% gain in the options

PetIQ Inc. (NASDAQ: PETQ): 14% gain in the stock, 77% gain in the options

Ultra Clean Holdings Inc. (NASDAQ: UCTT): 14.7% gain in the stock, 98% gain in the options

United States Steel Corporation (NYSE: X): 19.5% gain in the stock, 82% gain in the options

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Here are several completed trades from Technical Traders Alert, offering insights into our trading strategy and the targets that we have hit this week:

Sunrun Inc. (NASDAQ: RUN): With a Democratic administration coming in, we figured that solar would be an interesting play. So, when we saw RUN setting up a nice three-month base into mid-December, we put it on the report. On Dec. 18, RUN broke higher from the 50-day moving average (MA). Then, we moved in by buying March $65 call options for $10.40. 

RUN rallied through Christmas and then tested into the new year, all while holding the 20-day EMA. Since the move was still in place, we let it test during those two days. As the new year started, RUN moved higher, but it was not "running". Then, after the Georgia Senate runoff on Jan. 6, RUN blasted higher with a big upside gap. RUN gapped higher once again on Thursday. 

That move took RUN from near $68 to over $90 -- THAT is a run. On Thursday, RUN closed off of the intraday high. On Friday, RUN gapped higher again and then started to backslide to a doji. As a result, we sold half of the position for $29.85 and banked a 185% gain.

Spotify Technology SA (NYSE: SPOT): After four weeks of consolidating the November to early December run, many members in the group of cloud plays we like to trade, e.g. Twilio, Spotify and Peloton, were set up at a level of support to make new moves higher. Thus, we were watching for breaks higher. 

We saw SPOT break below the 20-day EMA toward the 50-day EMA early in the week and put it on the report. On Jan. 7, SPOT gapped over the 20-day EMA. That was our entry signal, and we moved in with February $330 call options for $23. 

SPOT continued running higher during that session, and gapped and surged again on Friday. After it hit our initial target, we went ahead and sold half of the options for $36.60 and banked a 59% gain. This was not bad at all for a day in the play, but frankly, we are looking for more gains on top of this.

We also banked gains on the following plays this week:

Freeport-McMoRan Inc. (NYSE: FCX): 84% gain on the first target, 121% gain on the second target

Lam Research Corporation (NASDAQ: LRCX): 55% gain in the options

Rambus Inc. (NASDAQ: RMBS): 65% gain in the options

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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:

Rambus Inc. (NASDAQ: RMBS): Of all the tech stocks, semiconductors were setting up the best for new runs higher. RMBS was relatively cheap, and its pattern was excellent. Indeed, it put in a three-week consolidation of its last run and moved back to the 20-day EMA. On Jan. 5, RMBS broke higher from the 20-day EMA. 

Since that was the move we were looking for, we entered by buying stock for $18.01. RMBS stepped right on the upside with the break, and on Jan. 7, we sold the position for $18.73 and banked a 4% gain.

We also banked gains in the following positions:

ConocoPhillips (NYSE: COP): 3.78% gain

Freeport-McMoRan Inc. (NYSE: FCX): 4.15% gain

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.

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3. Pick of the Week

PTON (Peloton -- $143.76, -4.77)

EARNINGS: 02/04/2021

STATUS: PTON gapped higher right before Christmas and cleared a 10-week cup base that it had formed along the 50-day MA. That gap finished a two-week run off of the 50-day MA. PTON then faded into Wednesday and stepped down to the 20-day EMA with an ABCD consolidation. On Wednesday, PTON showed a tight doji right on top of the mid-October peak that had started the base. We want to play a new break higher that holds the move over the entry point. A move to the target will give us a 60% gain on the options.

VOLUME: 7.748M  Avg Volume: 11.557M

ENTRY POINT: $146.03 Volume=13M Target=$166.29 Stop=$139.97

POSITION: PTON MAR 19 2021 $145 Calls -- (56 delta)

To see the chart for PTON, click here!

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4. Covered Call Options Play

Dropbox Inc. (NASDAQ: DBX) -- Dropbox Inc. is currently trading at $22.56. The Feb. 20 $23 Calls (DBX20210220C00023000) are trading at $1.03. That provides a return of about 7% if DBX is above $23 by the expiration.

Learn more about our Covered Call Tables here!

About Investment House:


Investment HouseOnline Since 1999! Our investment newsletters are designed to reduce your research time and help you invest and trade profitably. Our strategies range in risk from rather conservative covered call writing, trading blue chip stocks, all the way to speculating with options to get quick triple-digit gains.

Get to know Investment House with these premium investment services:

Investment House Daily
Technical Traders Alert
Success Trading Group
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