Daily Profit Compass April 28

Tickers discussed: SPY QQQ IWM SBUX SMH WORK ATVI  Strategy & Tactics

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.

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Earnings

GOOGL on Tuesday AMC   MSFT / FB Wednesday AMC   AAPL / AMZN Thursday AMC   plus lots of other notable names this week.

News Flow

  • Medical experts predict COVID returns in the fall.
  • Did $CCL get a back door bailout from Secret Santa Mnuchin?   See Story HERE  And in the WSJ if you subscribe HERE
  • $BA CEO doesnt see travel returning to normal for 2-3 years.  Voluntary layoffs / buyouts begin soon.
  • Stifel and Jefferies analysts jump on the marine tanker bandwagon  HERE
  • $BP profit nose dives 67% ; Crude continues to get pounded Boris Johnson goes back to work. Encourages UK to remain locked down.
  • NY AG says $AMZN safety measures inadequate
  • Mortgage chaos threatens to worsen once it’s time for repayment
  • OSHA inspections are key to re-opening but staffing is at a 45 year low. ( oops )

Small Caps Breakout

Something significant happened yesterday and it has the potential to be a game-changer.  The Russell 2000 IWM index had an impulsive 4% breakout above it’s Dec 2018 low.  The move dwarfed the moves put in by both  the SPY and QQQ.  Until this point, the bounce off the March lows has been relatively narrow and focused mostly on the FAAMG names.  During this time as other indexes and stocks challenged 50% and even 61.8% fib retracements, the IWM couldn’t even muster taking out its 38.2% fib.  The IWM is a risk-on index.  The breakout may be a sign that the rally is broadening and that traders / investors are hunting for opportunities in smaller, less well capitalized companies.  That would be a very encouraging for bulls.  So going forward, keep an eye on IWM as a risk -on indicator. $125 is your line in the sand.  A back touch of $125 would be a common technical move, but that back test has to hold.  If it does, it would be a great place for a long entry if you missed it. If however price begins trading back below $125 it would likely signal a false breakout and would be very bearish.

Sector Summary

Financials had a big day. This helped the IWM which is loaded with financials

 

Wave 2 DATA

4/28 Redbook / Case-Shiller / Consumer Confidence / Richmond Fed Survey / FOMC Meeting starts

4/29  GDP / FOMC Announcement 2pm w/ Presser

4/30 Jobless claims / Personal Income / Employment Cost index / Chicago PMI

5/1 PMI Mfg Index / ISM MFG index / Construction Spending / Rig Count

Charts in Focus

For all the charts on individual names, please check for earnings release dates!!

$ATVI

The high, tight bull flag looks promising. A breakout above $68 favors a move to the bull flag measured move target of $73

$SBUX

Earnings after the bell tonight. A pop and hold above $80 gets this back on track. A rejection sends it the other way. Key spot technically.

$SMH

Go long on a break above $135 with a stop just below.

$WORK

Hard stop below $26. Good chance to make $30. Sector tailwinds.

Strategy and Tactics – Neutral / Bullish

Trying not to be FOMO bullish, but picking spots. Got long IWM on the breakout as the set up was outlined in yesterday’s note.  Took a baby short on TLT May 1 168P

Positioning Update: long IWM May 8 $127 C ; Long GLD May 160 C. and  GLD May 165C ;  Rolled GDX  May 31C to May 35C ; long DHT Jun $8 calls; TLT May 1 168P small

Index Chart Review

SPY 2 hr

SPY 30 min.

QQQ 2 hr 

Be aware of the FAAMG names reporting this week beginning tonight after the bell through Thursday. THe Q’s will be subject to aftermarket moves in either direction. Take this into consideration on any overnight holds you may be considering.

QQQ 30 min

IWM 2 hr

IWM 30 min

 

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