Futures up, hold gains on Producer Price Index (PPI) weakening—in some aspects—then reverse the gains, states Jon Johnson of Investment House Daily.
PPI shows some lower prices but still significant gains in food and other key areas.
Jobless, continuing claims continued higher.
Stocks surge, reverse with key names showing doji.
Oil stocks hold the gains, and look ready to take the lead as tech tests some.
Chips are lagging, and look weaker.
Futures were higher again prior to an inflation number, and when producer prices slowed, some fading and some continued gains, futures added more, which bled over into the first hour of the session. Status quo: news comes out, news can be good economically, news can be bad economically, market rallies regardless.
General Mills, Inc. (GIS): Yes, cereal. Not that sexy, perhaps not even that healthy, but with food shortages starting to show up and more to come, sexy takes on a new meaning in Investment House Daily. Making money is always sexy, and having breakfast cereal when you are hungry speaks for itself. When you add to the mix GIS testing a late June breakout, well, be still my heart.
In late July, GIS faded to the breakout point from a base formed from April to late June. The stock touched down and held, working laterally in a tight range. On July 25, GIS broke higher, signaling our entry. We issued the entry alert to buy September $72.50 calls at $3.60. The stock traded at $74.22. The initial breakout was a lot of fireworks with strong surges. This move off of the first test was not as flashy, more of a grind, you could say (Get it? Cereal. Grind.).
The grind worked, and on August ninth, GIS hit our initial target. We issued the alert to sell half of the options at $5.20, a 44.4% gain. GIS continued higher, then, on August 11, it jumped upside but started to stall. We issued a second alert to sell, this one at $5.78 for a 60.5% gain. We still have a quarter position remaining, we'll let it grind and work its way higher as long as it can.
We also took gain in the following positions:
Microsoft Corporation (MSFT): 35% gain in the options.
Omeros Corporation (OMER): 49.7% gain in the stock.
JFrog Ltd. (FROG): FROG set up a solid double-bottom-with-handle pattern from mid-April, with the handle forming from late June into early July. On July fifth, FROG broke higher with a solid move out of the handle, which was our entry signal for Technical Trader Alert. We issues the alert to buy September $22.50 call options at $2.70 as the stock traded for $22.37.
A solid breakout and FROG continued higher through the next two sessions. Then, the bids died and FROG stopped jumping. It slid down to the 50-day exponential moving average (EMA) as of mid-month. The hops returned, however, and FROG moved back higher...only to backslide again to the 50-day moving average (MA).
After that second test, however, things stabilized. FROG hopped higher into late July, then started jumping higher the first week in August. On August eighth, FROG hit the 200-day simple moving average (SMA), our initial target, and started to slip.
We issued the alert to sell half of the options for $3.60 for a 33% gain. We wanted to see if FROG could punch through the 200-day SMA, so we kept half the position working.
After pausing a session, FROG did just that, surging up through that resistance on August tenth. On Thursday, FROG started higher, but immediately came under pressure. So, we issued another sell alert to sell at $4.50 and bank a solid 66+% gain.
Ollie's Bargain Outlet Holdings, Inc. (OLLI)—Ollie's Bargain Outlet Holdings is currently trading at $65.08. The September 16 $75 Calls (OLLI20220916C00067500) are trading at $3.50. That provides a return of about 10% if OLLI is above $75 by the expiration.
Learn more about Jon Johnson at InvestmentHouse.com.
