Monday, November 18, 2019

Weekender 11/17

1. Market Summary

Walking the Line

– Another soft open led to some bids, but no breaks higher.
– China is being childish on trade as it wants the tariffs removed before it agrees to anything.
– Prices remain relatively under control.
– Stock indices remain in their lateral consolidations. While some leaders broke higher, others tried to do so but were slapped back.
– We are still awaiting the breakout move.

Another day of the same type of action began when futures started lower and then moved higher to the close. This path was bumpy along the way and featured a big drop mid-morning. However, stocks caught a bid and recovered their losses during the last four-and-a-half hours of trading.

While the indices did move up off the lows, the recovery did not bring them positive gains. Those that made it into the green just barely reached into positive territory.

Gee, another session where stocks did not just surge to new highs or new closing highs (although the S&P 500 did put in that new closing high). What could be wrong? Find a scapegoat.

Chart Analysis:

S&P 500: It tested the 10-day exponential moving average (EMA) on the low during the second session and rebounded upside to a new closing high. Since the volume fell, not a lot was driving the move. Okay, maybe it wasn't a move. It was more of a bump higher.

NASDAQ: It also tested the 10-day EMA and then rebounded. While it did not achieve a new high, it was at the top of the range. While there has been some churn during the past two weeks, the NASDAQ still looks to be solid for now.

NOTE: The figures and information above are from the 11/14 report.

Watch the Investment House Videos For This Week Here!

NOTE: The videos are from the 11/13 report.

2. Targets Hit

Here are three completed trades from Investment House Daily, offering insights into our trading strategy and the targets that we have hit this week:

Cummins Inc. (NYSE:CMI): Industrials set up good patterns from August to September and were breaking higher. After we played CMI on its October run and scored a good gain, we kept watching CMI to test that move and set up a new run. In late October, CMI started testing the rally. It came back to the 20-day EMA and the gap from July. It soon found support there.

Then, it started to bounce and we put it on the report during the Nov. 3 weekend. On Nov. 4, CMI continued higher and we entered with January $180.00 call options for $6.60. As is often the case with these breakout tests, CMI wasted no time moving back up. It rallied each session up to near our target. It started to slow, however, and began working laterally.

On Nov. 12, CMI started higher but then started to fade at the same resistance. That indicated that this nice six-session bounce was running out of energy. We sold the options for $9.40 and banked a 42% gain.

Palo Alto Networks Inc. (NYSE:PANW): We saw a nice break higher to end October as PANW moved out of a short flag consolidation that formed right at the July high. After it broke that high, we saw a strong volume and believed that this was a great entry. So, we put it on the report.

During the next session, PANW continued higher. We bought the January $230.00 calls for $14.80. PANW immediately ... slid laterally for three sessions. Once the 10-day EMA caught up, however, PANW took off again. It rallied into Wednesday, where it hit the initial target and then backed off a bit. We then sold half of our options for $21.50 and banked a 45% gain. We will see if it can keep its momentum as it goes up to $250.

Teva Pharmaceutical Industries Ltd. (NYSE:TEVA): TEVA was one of those stocks that was coming out of a long downtrend, showing the signs it was "turning the corner" and indicating that it was ready to rally and make us gains. On Oct. 17, it broke up through the 50-day moving average (MA) on volume. After we put it on the report, it broke higher again with a surge on Oct. 21.

We entered by buying stock for $8.16 and some December $7.00 call options for $1.84. Normally, we like these plays because they can make us big percentage gains in a short period. Unfortunately, TEVA ... did not. After that Oct. 21 surge, it stumbled around for two weeks and slowly worked higher. It started November well, looked as if it was ready and then faded.

Finally, it caught a bid on Nov. 8 and the momentum carried it up to Wednesday, where it hit the target. We sold the stock for $9.40 (a 15% gain) and the options for $2.50 (a 35% gain).

Receive a risk-free trial to Investment House Daily and save 50% by clicking here now!

Here are three completed trades from the Success Trading Group, offering insights into our trading strategy and the targets that we have hit this week:

NASDAQ:AMD (Advanced Micro Devices, Inc.)

On Nov. 12, we saw AMD edge higher from a week-long consolidation of the breakout move that it had started in late October. After we got ready for the play, AMD broke higher from the consolidation on Nov. 13. We entered at $37.22. During the following session, AMD jumped higher early and then started to waffle. As a result, we sold our shares for $38.04 and banked a 2.2% gain. Although we left some shares on the table, AMD closed at $38.35. Oh well, we will play it again on the next test.

NASDAQ:INTC (Intel Corp.)

Similar to AMD, we saw INTC break higher from a week-long lateral consolidation (flag pattern) of its gap on Nov. 4. After that move, we bought INTC shares for $58.62. During the next session, INTC rallied higher. It looked great ... and then faded. After that, INTC plodded as it moved higher, faded, moved higher and faded again. Nonetheless, it moved higher. On Nov. 12, INTC jumped to a higher high and then started to struggle again. Okay. We sold our shares for $58.62 and banked a 2% gain. INTC has still been walking laterally since then. If it makes a new breakout, we aim to play it again.

NASDAQ:MSFT (Microsoft Corp.)

MSFT showed the same type of play -- the breakout gap and then a lateral consolidation. We love playing the move off the consolidation. On Nov. 8, MSFT broke higher and we moved in at $146.11 on Nov. 11. MSFT walked higher from there. On Nov. 15, it gapped higher, tested and then resumed the move. As it hit our target and started to falter, we sold our shares for $149.09 and banked a gain of just over 2%.

These are examples of what you'll get by becoming a member of 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.

To receive a risk-free trial and save 50%, click here now!

3. Pick of the Week

EEFT (Euronet Worldwide--$147.54; +0.96; optionable)

EARNINGS: 01/21/2020

STATUS: Downward wedge. We have been looking at EEFT again as it had set up a pattern in a way that was a bit better. It peaked in July and sold to and through the 200-day simple moving average (SMA) as of late October. The range narrowed as it sold and formed a downward pointing wedge.

In general, wedges tend to break in the opposite direction of the way that they are pointing. EEFT broke higher to start November and moved through the 200-day SMA. Since then, it slid laterally on low trading and has taken a breather. This stock is in a great position to move higher and looks very solid. A break upward that holds the move through the buy point will be the entry signal. A move to the initial target will give us a solid 70% gain on the options.

VOLUME: 255.408K Avg Volume: 423.315K

BUY POINT: $149.11 Volume=520K Target=$156.00 Stop=$146.78

POSITION: EEFT DEC 20 2019 150.00C -- (67 delta)

Watch the EEFT Analysis Video Here!

To receive all of Jon's picks in Technical Trader, click here now to start your risk-free trial and save 50%!

4. Covered Call Options Play

Sangamo Biosciences Inc. (NASDAQ:SGMO) -- Sangamo Biosciences Inc. is currently trading at $9.46. The Dec. 21 $9.00 Calls (SGMO20191221C00009000) are trading at $1.00. That provides a return of about 11% if SGMO is above $9.00 by the expiration.

Learn more about our Covered Call Tables here!