Daily Profit Compass Aug 25

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Tickers discussed: SPY QQQ IWM  PANW KRE  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 

Do your very best to find the objective, low-risk set ups that work for you. But once you make the trade, its not your place to make demands. It’s your place to observe and take notes about the movement of the market and your position in it. A scientist does not cheer if the mouse turns left in a maze nor does he slump when the mouse turns right. He dutifully makes his observations and takes notes. Be neither a bull nor a bear, embrace the randomness of markets and take the very best set ups you can. When you let go of the expectations,  the emotional highs and lows dissolve. When the emotional links to trades dissolve, the mind quiets, and stability is found.

Companion Video

The 25 min Video covers the indexes, FAAMG names and quick looks at KRE and PANW.  Run the video at 1.25X to reduce run time.

Earnings

News Flow

  • The DOW sees biggest shake-up since 2013.  XOM, PFE, RTX out;  CRM, AMGN, HON  in.    The changes were spurred by the AAPL stock split.
  • US – China signal progress on Trade Deal talks.
  • AAPL defeats EPIC games on spat over Fortnite on I-tunes APP
  • Powell’s upcoming speech at Jackson Hole to suggest sea change at how the Fed looks at inflation

Elon has some work to do in Europe

Analogs – If you hunt long enough, you’ll eventually find a fit

The “Great Rotation”  Returns

Welp, one day does not make a trend, but buyers rushed back into cyclicals and value again.  The following groups had strong moves supported by strong bullish option order flows. Airlines ( LUV / DAL / AAL )  Banks ( BAC, C , WFC, and some GS ), Cruise lines ( CCL NCLH )  Retail  GPS   Hotels MAR.     These rotations are bizarre. They come from no where with no apparent catalyst. They just show up. All that said, the rotation did not hurt tech that much other than to say QQQ was on the soggy side compared to what we’ve come to expect. Let’s pay attention to the value names and participate if we see something, but not go off the deep end. We’ve seen this movie before.  A good week, then here comes the fade. Maybe they wont even wait a week.  In KRE, the regional bank ETF,  a whale bought Sept 39 / 34 Put spreads 33,000 x plus on the 4% pop. THere’s at least one player who isnt buying it.

Strategy & Tactics

No Changes – Maintain Bullish bias; be cognizant of the many yellow flags

  • FAAMG – THe 60 min levels on these names have been pure gold. Use them to your advantage if you are an active traders.
  • 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

Charts of Interest / Trade Ideas

$KRE Daily

Price grinding into the apex of a symmetrical triangle. A pop above $42 gives this running room above the 200ema and in a volume / price void to $47. I like that set up if it materializes. If price goes the other way and breaks below $38 then here comes $34. 

$PANW

My thoughts are in the annotations. I want to watch this closely over next day or so to see if we can buy the dip after earnings.

Active Trade set ups / Positions

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Aug 24 Activity:

TWTR – Opened Sept 41 C for $1.73 on breakout

PINS – Opened Sept 32.5 puts at $1.83   on a breakdown from a consolidation range and into a wide open gap.

Aug 20 Activity: 

XRT- Extreme bearish order flow has again picked up with big players shooting against our long position. In the face of soggy retail numbers and the bearish order flow we closed the Sept 50 Calls for $3.05

$V Rolled stops to breakeven

Aug 19 Activity: 

Trade Idea to get long $V  at the money Sept  Calls against $200.

Aug 13 Activity

$XRT – Sept 50 C ; Closed 1/2 of position.  Entered Aug 5 at 1.90; closed at 2.90.   On the other 1/2 of position sold Sept 53 C for $1.20 credit.  These moves were prompted by extreme bearish order flow into the Aug 28 exp $51 puts over 15,000 x.  Retail Sales and Retailer earnings forthcoming.

EBAY  Opened Sept 60 calls. $1.23. Looking for a move back to the highs

$IBB Closed short position for a small loss.

 Aug 12 Activity

$INTC  I finally gave up on this short. More a time thing than price hurting. Closed Sept 47.50 Puts for about a 30% loss.

$GLD  Re-entered short with Aug $180 puts. Needs to move rather quickly, if it does not, will need to exit or buy more time.

Aug 11  Activity

$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;

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

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

Index Chart Review

SPY 30 min

QQQ 30 min

IWM 30 min

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