Daily Profit Compass Aug 12

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Tickers discussed: SPY QQQ IWM  CF MNST IBB DNKN FAAMG Update  TLT  GLD 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 

Stay on your path

Although it may seem at times that you need a machete and an axe to make progress along your trading path, I can assure you that you’re making progress. Keep at it.  Remember too, you don’t have to walk alone in solitude. Reach out and expand your trading network. We all need help and encouragement along the way, but you’ll need to be the one who seeks out those relationships. Rarely to they magically appear.

Earnings

News Flow

  • Kamala Harris named as Biden’s running mate.
  • China to raise TikTok at upcoming Trade talks with US
  • Trump pledges more tax cuts
  • $LOW announces major supply chain expansion to speed delivery times.

$ZM sell off in perspective

NAZ 21 day MA has contained pullbacks so far.

Most Shorted Stocks – Potential rocket fuel if these names get squeezed. 

FAAMG flame out?

FAAMG names have been soggy and subsequently the major averages have been soggy too. That’s what $4T in market cap will do.  We will be doing well if this FAAMG slow down is contained to what amounts to paper cuts. If any true profit taking were to come in, you’d quickly see some carnage. No predictions, just possibilities.  Keep and eye on SaaS / Cloud and other W-F-H names that have recently done moonshots. THey still have a lot of air under them. FSLY is a great example.  Price is on the ledge of a $30 drop off with absolutely zero support beneath it. Open the chart and set an alarm….they are still FREE.   If it breaks, you’ll be ready.

Value – We should soon know if rotation to value is a durable event or the pop n fade variety we’ve seen 2-3x since May.   Let’s pick good spots with objective entries rather then trying to grab a runner in no man’s land.

Strategy & Tactics –  

FAAMG has been soggy to bearish in recent days. If FAAMG rolls over or stalls, the sheer market cap will make it tough for SPY to simply run away. IWM has the tailwinds if Value goes on a run. 

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

  • FAAMG – THe 60 min levels on these names have been pure gold. Use them to your advantage if you are an active traders.
  • High Flying Work-from-home  names getting whacked on profit taking and absurd valuations are re-examined. Still lots of air can come out if value rotation persists. 
  • Parabolic collapse finally hits gold / silver and miners. Still more room to downside.
  • 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 

 

Charts of Interest

$GLD 60 min

Despite the dramatic drop yesterday, gold still only about half way to my expected target of $170. It won’t go in a straight line, so this is where your skill as an active trader comes into play. Notice the big volume / price air pocket on the left. Not much technical support here.  Lots of gaps to fill as well.   Use bounces to key levels as places to layer in shorts.  Prefer multiple small entries vs one giant bazooka blast that you could get squeezed out of.

$TLT – 60min

Notice how the gap down yesterday trapped longs and denied shorts a good entry. $167.50 looks like a good pivot point to use as a reference level.

 

Active Trade set ups / Positions

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

++++++++++++++++++++++++++++++++++++++++++++++++++++

New Activity on Aug 11

$IBB – opened Aug $132P   $2.32

$MNST – opened Aug 80P looking for gap fill coming out of bracket low.   $1.02

$CF – Taking a shot at Sept 40 C  at 45c.   after players hit that strike 2600x ++

$DNKN –  opened Sept 72.5 C  looking for a breakout ahead of earnings after the Sept options expiration.

$GLD  Closed puts for massive 340% win.  looking to re-enter;  – Bot GLD Aug 14 $190 P  Aug 7

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

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

JMIA –   Earnings Aug 12. Will pick up ball after that.

$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.

$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.

$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 –  Not working. Any daily close above $49.50 and we are out. We’re in the Sept 47.50 Puts

Index Chart Review

SPY  4 hour

Price needs to hold the low side of the channel or a sell signal will fire on this longer time frame.

SPY 30 min

QQQ 4 Hour

Like SPY, the Q’s are testing the low side of channel support. Needs to hold here.

QQQ 30 min

IWM 30min

Price needs to take out $160 to open the door to a move toward $165 – 167.50.  If the big rotation into value is real, it should be able to do it.

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