Daily Profit Compass April 15

Tickers discussed: SPY QQQ IWM  AAPL BAC  C  GS  PNC  USB    Strategy and Tactical Update

The Daily Profit Compass provides the stock market analysis for the day. Key levels and trading locations for the indexes are provided, along with trading plans and timely commentary to keep you on the right side of the trade.

Trader’s Couch : 

“All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”  Blaise Pascal  1600

and specifically for traders……..

” There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily—or sufficient knowledge to make his play an intelligent play.”   Jesse Livermore  1915

“First, put your phone down, close Facebook, close Twitter, close YouTube, close Spotify, and turn off CNBC. Then intently watch the price action and candlestick formations. Watch how price interacts with support / resistance. After a few days, you may see a trade develop.   TradingYoda 2020  (me)

Rushed trades, unforced errors, flawed analysis, FOMO trades, blindly following other people’s trades, and revenge trades all have roots in our absolute inability to sit quietly, by ourselves and do nothing. Waiting for an objective, high-probability trade to develop is boring.  Active traders are often bound and determined to be trading every moment of every day no matter if there is a trade or not and it costs them big money. ( ask me how I know ) True pros learn to discern the difference between “any old set up” and an “exceptional set up” and are willing to wait for it.  I think there would be real benefit to practicing “doing nothing”.  Once you can do nothing as market information flows over you, you’ll truly be in the catbird seat, ready to both recognize and pull the trigger when a primo risk / reward set up comes your way.

I double dawg dare you!   Try studying charts and the tape for a couple of days and commit to not making any trades. I am willing to bet some among us couldn’t make it from 9.30 until noon on day one and if we did, our skin would be crawling. Let me know how you did!!   

I wrote a blog post on this topic in the Lessons from Livermore series  HERE

Earnings

News Flow

  • Trump halts WHO funding
  • Trump assembles business leaders from a wide swath of industry groups for input on the econ-restart plans
  • Oil collapses; Gold pulls back
  • $FTR files for Ch 11; $JCP close behind
  • Airlines get their rescue money
  • With Autos, Airlines and meat packing plants all stunned, Covid is going after your banana supply chain.

Risk comes home to Roost

Seeing some red this morning as futures near a 2% pullback. Maybe it was the IEA saying the “historic supply cut” wasn’t going stop the storage from filling up. Maybe it was the article by Axios that tells how Covid is blowing a hole in state and local governments by jacking costs and cratering tax revenues. Find the article HERE   Maybe it dawned on traders that the economic numbers will be on par with the Great Depression. Or maybe it was $NYMO being at 100.  On the bright side of things, being off 2% after being up 27% in a month and up 3-4% yesterday is no biggie, just part of the game. We’ll need to watch carefully for any confirming sell signals indicating a likely trend reversal.  But then again, Jay Powell usually doesnt log onto the money -printing server until about 8.45 am.  He might have everything fixed by 9.30 am.  He’s got tricks we can’t imagine. The main problem with constant Fed intervention is that it messes with your mind. You start seeing ghosts. You’ll see a sell signal and wonder if Jay will invalidate it by the end of the day. It’s hard to play a game when all the ref’s are paid by your opposition.  It’s what we’ve got so we need to do our best.

I am not anything close to being a competent fundamental analyst, but from what I hear, the JPM and WFC earnings reports were not so hot.  Bad revenue and profit misses with big loan loss provisions for the inevitable coming defaults.  The problem with setting aside $8B for loan losses is that we don’t know if that is the end or the beginning. Expect more of the same from $BAC, $C, $PNC, $GS  and $USB who all report this morning.

Breaking News:  I got my $1200 Covid check last night. Tell you what….if I got $1200 every week or so, and the government sent me a reimbursement check for the $250K I spent on my kid’s college tuition, and all my medical expenses were free, socialism would be really tempting.  We could rename the FED as “The Office of Economic Central Planning”

Sector Summary

 

Wave 2 DATA

4/15 Retail Sales / Empire State MFG Survey / Industrial Production / Business Inventories / Housing Index / Beige Book / Bostic speaks

4/16 Housing Starts / Initial Jobless Claims / Philly Fed Survey / FOMC Balance sheet at 4pm

4/17  April OP-ex / leading economic indicators

Strategy and Tactics – Tilting bearish

No changes.  Still being slightly short.  It will take more than a 2% drop to reverse this trend so we will have to see how many weak hands are in this latest bull run.

Positioning Update: Short IWM ;  Long GLD May 160 C. and made a baby add with GLD May 165C ;  Long GDX  May 31C.  Gold and GDX are dipping this morning. If you are not in the trade, this would be a good day to nibble or for others to do a small add if you want more exposure. GLD and GDX are tough to micro manage. Give yourself time to let the trade work. Both are in bull mode and continue to expect prices to grind higher over time. Dont freak out over a 1% pull back after a 15% ++ 3 day move.

Oscillator Watch

Both $NYMO and $NAMO both too hot for new long exposure. Snap back is coming and it starts today. .

 

Charts in Focus

$BAC Daily  Price needs to recapture $25.75 and hold it to get on the right side of the chart, otherwise lower prices would be favored from here.

$AAPL  60min  Bulls need to hold a backtest of the gap at $278.05, otherwise a $5 gap fill would be favored and give the bears something to sink their teeth into.

$C Daily  $47.50 is your bull / bear pivot. Long above, short below.

$GS Daily.  Although I have not really drawn it that way, one could easily use the 50ema as your bull / bear pivot. $190 / 192.50 will be tough to punch through.

$PNC Daily  $105 is your bull / bear pivot. A nice chart that shows how I use volume / price bars on the left to help define “value areas” and “price voids” where price moves quickly.

$USB Daily $38 is the bull / bear pivot.  Like most of the other bank charts, there is a well defined lower area of value and for the most part, price is at the top end of that range across the board.

Index Chart Review

Follow the annotations on the charts.

SPY 2 hour

SPY 30 min.

QQQ 2 hour 

QQQ 30 min

IWM 2 hour

IWM 30 min

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