Daily Profit Compass Aug 10

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Tickers discussed: SPY QQQ IWM  FAAMG Update  GWPH FLT DDOG  TMUS Open position update 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.

Trader’s Couch 

Focusing on Accountability

In the mentorship groups I host, we have spent a good deal of time discussing the importance of building a high-performance support team with which to surround ourselves. If you think about it, every top performer has such a support team. A vital part of that team is a person to whom you are accountable. For those that are thinking “I am accountable to myself”, sorry, it doesn’t work that way. Too many excuses and free passes.  Businessmen are accountable to clients, CEO’s are accountable to shareholders, Sports figures are accountable to their teams, sponsors and fans. Traders on Wall Street are accountable to their Trading Floor Manager and firm. You should be ( and are ) no different.  Identify a person in your life that you will be accountable to in your trading. Begin journaling your trades. Review your trades with them every 4-6 weeks. Explain all the factors of the trades. Reason for getting in, reason for getting out, risk / reward, profitability / loss. etc.   I can assure you that if you know someone is going to review your trades, you will spend more quality time thinking about putting on trades and less apt to impulsive, over trading.

How one person is handling it. 

A person from the mentorship group is taking daily notes on his trades and sending them to me each day for review.  Here is a snippet of one of these recaps.

“DIS shorted 5 for 6 scalps at the open , the plan was to short a big burst into overhead resistance but DIS kept going up , I just took 1min divergence scalp shorts .. in hindsight, I was on the wrong side of the trade long would have been easier…

Result small WIN

SQ plan was to long a set up into new highs, took a long on the 5min 9ema tag but my entry was total shit and I had to watch it go all the way down , nearly stop me out for 1.5x R loss and come all the way back up to a -20.00 trade where I sold.  It actually would have won had I let it ride but emotionally I did not want to watch it die twice. ”

The trader reports that the simple act of writing down trades and knowing someone will be looking at them has slowed him down and the quality of trades and results are improving.  As you think about who could serve as your “trading manager” keep in mind they don’t necessarily need to be familiar with trading. All they need to be is interested in your success.

Let me know your progress and please reach out if your get stuck

Earnings

News Flow

  • Trump side-steps deadlocked Congress and offers executive actions on Covid relief.
  • Concern over Hong Kong grows as Media Tycoon is arrested Congressional Stalemate persists on Covid Relief Package
  • Simon Properties / Amazon in talks to re-purpose vacant mall space into Amazon distribution hubs
    • Vacant JC Penney and Sears space seen as logical starting point.
  • Bill Gates says we have “mind-blowing problems” when it comes to Covid testing.
  • 1/3 of renters say they expect to miss their August payment
  • Layoffs in the Shale Patch are said to be just beginning.

Tips on Navigating the Market

Nobody knows where this market is going nor the mechanism by which it will get there. With uncertainty on the rise it can play games on our minds. Lots of boogeymen around each corner. Let’s break it down into bite-sized pieces.

  • All indexes are near the highs – that’s bullish, not bearish.   It is not productive to speculate if the current levels are “fake”
  • We need to maintain, at a minimum, a bullish bias until we have facts that support a more neutral or bearish view.  That could come as a trend line violation or some other technical event.
  • A tip-off  could also come if  bullish set ups stop working. If you hold stocks that have either stalled or otherwise are not working, you can exit them and hunt for fresh opportunities.
  • Remember Soros. “When I see a bubble I BUY it”   Why?  Because they can often be very profitable.  If we participate, then remain disciplined about rolling and protecting wins, the inevitable reversal will not sting as badly.
  • If we conclude that the run is over, we can quickly exit our positions and go neutral or bearish.

Strategy & Tactics –  No Changes

Fresh break outs are bullish. Now we have clean likes to shoot against across all the indexes.

The new levels become key reference levels for us going forward.  

  • FAAMG – Continue to Watch closely for bullish or bearish price action following earnings.
  • Markets seem poised for a FOMO run. Watch for QQQ breakout to ATH and SPY breakout above $329 to spark another rally.   Check…..we got this yesterday
  • Massive GDP contraction and bump in initial jobless claims met with a collective sigh by markets. No effect. 
  • Caution on GOLD / SILVER appears to have been wrong as FOMO rages. Tough to set in long here.  It’s like buying JMIA at $22 yesterday. When ever this collapse / pulls back, it will be fast. Be sure you are rolling and protecting your profits.
  • Staying bullish does not mean complacent
    • Stay vigilant! Ratchet stops / Strikes higher on your winners and keep exposure at manageable levels.
    • Dont be afraid to go short if you get a price signal; especially if you’re holding a bunch of longs. You’ll like that balance on red days. 
    • Mark clear levels on your holdings for exits; honor those levels on a pull back.
    • You know they can pull the rug at any time for no reason at all.
  • Stay Fluid and flexible in both positions and thinking; Dont lock in on Narratives.
  • Expecting a hi-vol summer with Covid and political headlines whipsawing markets

FAAMG Live Annotated Charts

Click on the Links to view my annotated live charts

Updated August 10

FB                  Daily

AAPL            Daily

AMZN          Daily

MSFT           Daily 

GOOGL       Daily 

Fresh Bracket Trade set ups

 

Active Trade set ups / Positions

Bold Text signals meaningful technical changes and / or potential change in an active position. 

$TLT – Closed for a small loss Aug 7….. Rolled to Sept 4 TLT 172 calls at the bell Aug 4

$UUP – Initiated Sept UUP Sept 25.50 calls  Aug 3    looks like a fail. Will post if i exit

JMIA –  After a run from 8.50 to 24 in a couple weeks, we got stopped as the parabolic advance collapsed. Earnings Aug 12. Will pick up ball after that.

$FCX – Closed w/ a small loss. stops hit. We have SEP 14 calls at $1.18 for exposure in the materials space.

NEE – Flagging above $280 post earnings; considering fresh long entry

$DLTR –  New Name. Alarm $100 for a potential gap fill $12 higher.

$COST: Closed for a nice win on Friday at $340 …. Monster break out. We are long against $322.50.  Measured move target is $357. Stay long. Manage risk.

$FDX – Watching for re-entry – exited last week at 173.5

$GDX –  PM complex near peak FOMO and parabolic charts are due for a pause. Keep rolling and protecting your positions.

$NFLX – Price flirting with the $25 OH gap at 405.   405 is an important pivot. Trade as you like. Ops on both sides. 

$DDS –   Did you pick some up?   Up 20-25% in just a few days.  Like it long against 22.50; but short against $22.50 on a break below.

$FIZZ –   We are out 

$OLLI –  Watch for downside bracket break or potential long. Active Bracket trade set up. Alarm $110 for potential breakout to fresh ATH’s; 

$BBY – BRacket Buy Trigger yesterday. Active Bracket 99.50 and 95.30.  

$SYNA – Active bracket but earnings Aug 5  Bracket trade set up . alarm $81 and $77.   Waiting till after earnings to enter

$WKHS – Vol compression now. Could break either way. Set an alarm at $13 support.

$XRT –  We got long against $45.50; with the stock near 50 we Rolled up from August 45 Calls to Sept 50 calls and raised stop to 48; staying long

$INTC –  Any daily close above $49.50 and we are out. We’re in the Sept 47.50 Puts

Index Chart Review

SPY Daily Fibs

Common Fib retracement levels off the March lows

SPY 30 min

QQQ Daily Fibs

Given we’ve had a largely uncorrected unidirectional move off the lows, I dropped in the Fib retracement levels simply for a reference point.  A pull back at some point to test the 200ema at $220 is a reasonable expectation and would not be outside of typical pull backs. Again, not a prediction. Just posting for awareness of how extended we are vs the ema’s and Fib levels.

QQQ 30 min

IWM 30min

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