Daily Profit Compass April 17

Tickers discussed: SPY QQQ  IWM   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.

Programming Note

Some unexpected personal business popped up that will keep me away from the trade desk most of today.  Consequently today’s Profit Compass will be on the skinny side but I do want to give you the key levels and trading guidance heading into the day.

Earnings

News Flow

  • Markets cheer as Trump outlines re-start plans although Governors sit in the driver’s seat on implementation.
  • China reports worst ever economic data
  • $BA to re-start commercial aircraft assembly plant
  • Efforts to re-fund the SBA loan program stall
  • $GILD pops on promise of Covid therapeutic
  • Now Vanity Fair is asking “Where’s Warren?” as Buffett remains dark. He will probably pop up with an announcement that he has deployed $120B over the past couple weeks.
  • Euro car sales worst ever
  • $PLNT pops on hopes of re-opening gyms
  • Second wave of COVID cases hitting Wuhan and Singapore

Lift Off

Market popped dramatically higher on Trump’s big reveal of his economic multi-stage  re-start plans. The plan hinges on increased testing and a sustained progression down the COVID infection curve. Despite the President’s recent bluster proclaiming that he is the ultimate arbiter of when to open the economy, it is the Governor’s who will decide when and how each state will re-open. Therefore the Trump Plan if you will, is simply a set of guidelines for Governors to use as a reference. In other news, it seems that Governors are forming regional working committees to coordinate re-start activities and timetables. There is a northeast group, midwest group, and west coast group. It remains unclear how these committees will actually work. For instance, Detroit is an emerging hotspot and has not “bent the infection curve” yet. Are the rest of the mid-west states on the committee going to wait on Michigan before re-opening or at the end of the day, will it boil down to every state for themselves?  Time will tell. Michigan recently extended its stay at home order.

Reminder:  Today is April option expiration. Make sure you take care of any open positions you may have before the close to avoid any surprise assignments. 

Sector Summary

Symmetrical bifurcation yesterday.

 

Wave 2 DATA

4/17  April OP-ex / leading economic indicators

Strategy and Tactics 

The overnight pop will likely invalidate many bearish set ups out there and force those who were short anything to cover their position, myself included. Nothing has changed on the macro front but price is the ultimate arbiter.

Positioning Update:  Double whammy as IWM is up  and Gold is down.  I will likely close my short on IWM at the end of the day if the opening gap holds.

Will advise on Gold and the gold miners.  On IWM , I rolled down to Apr 24 $116P;  Long GLD May 160 C. and  GLD May 165C ;  Long GDX  May 31C.

Index Chart Review

The overnight gap up will of course not be reflected on the end of day charts posted below. On each chart I will point out the key trade locations and general thoughts for the day.

The most important thing today will be the big opening gap that will be below price this morning. Implement “gap rules” across the board for the indexes or any security you may be trading or owning .

In general, the gap will be from this morning’s open to last night’s close. What you want to see ( if you are long ) is for price to hold it’s open and build on the gains. A move lower, below the open, leaves price vulnerable to back filling the gap. That can be a very profitable trade if you catch it right and price retraces the whole gap.

SPY 2 hour

QQQ 2 hour 

 

IWM 2 hour

 

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