Daily Profit Compass April 20

Tickers discussed: SPY QQQ IWM  XLF XLP XLY    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.

Inspiration – Be Humble

After a nice run in your trading, it’s likely that you’ll start thinking you know something and have figured it all out. You don’t and you haven’t. Resist that mindset and focus on being humble. So too in your failings. You’re not as bad as you make yourself out to be.  Being humble in both success and failure keeps us grounded and close to our center.  When you’re close to your center, you are much less apt to seek the approval of others to make you feel better.  That part of us that adores compliments and adoration is what compels traders to remind or inform everyone within shouting distance of their latest win.  In my experience, you dont need to remind people of your wins, they will know already.  So stay humble.

Earnings

News Flow

  • Some tariff payments delayed 90 days to help company cash flows. ( delayed , not eliminated )
  • Oil dives 20% overnight and is trading with a $15 handle as demand evaporates and storage fills
  • $SHAK  shamed into returning $10M in PPP monies after “real people” found out this “small business” stepped to the front on the line.
  • Cautionary tale in Singapore as COVID cases  spike to over 1000 for first time as premature re-opening comes back to bite them.
  • More pain for $BA as China Leasing cancels $3B MAX order.
  • $DIS stops paying 50% of its employees today leaving them completely reliant on state unemployment benefits

 

Caution is warranted

The yellow warning lights have been flashing for a while but to the point they’ve been mostly ignored.  But that is typically how it goes with warning signals. Lots of people ignore warning signals thinking it doesnt apply to them.  What we also know is that bear market rallies can be very convincing. So much so that even the most committed bear will be forced to cover shorts and question their thinking.  It also lulls unsuspecting bulls to press on and become even more committed to the rally. THe oscillators are stretched,  Short exposure is ebbing, and the econ data disastrous.  We are off 2% in futures but with Jay Powell lurking with infinity liquidity and with 5 interns in the basement of the FED buying everything not nailed down, its too early to call for a reversal. We’ll wait and see if the bears have real ammo or this is just another pull back with an uptrend that will keep going.

Be careful out there

Sector Summary

 

Wave 2 DATA

4/20 Chicago Fed Survey

4/21 Redbook / Existing home sales / $NFLX earnings AMC

4/22 Mortgage applications / Oil inventory

4/23 Jobless claims / New Home sales / Flash composite PMI / KC Fed MFG Index /  Natgas inventory

4/24  Durable Goods / Consumer sentiment

Sector Set ups

$XLF Financials

Bulls ok above $21.50; bulls get emboldened below $21.50

$XLP Staples  Solid support  below favors bulls  as long as they can hold the 200ema at $59

$XLY Discretionary  Price is at tough resistance confluence of 200ema and overhead technical resistance. I think the run ends here but if price pops the 200ema you’d have solid support beneath to go long.

Strategy and Tactics – Tilting bearish

No changes.  Still slightly short.  and long gold and gold miners

Positioning Update: Short IWM , repositioned in Apr 24 $121P;  Long GLD May 160 C. and  GLD May 165C ;  Long GDX  May 31C.

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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