Daily Profit Compass Aug 4

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Tickers discussed: SPY QQQ IWM  FB AAPL AMZN MSFT GOOGL FAAMG Update   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 

There is trading wisdom all around us. You may even find some wisdom here each day.  Don’t ask why, don’t add to losers, respect risk, keep your position sizes the same with no favorites, sell losers, hold winners, buy strength, sell weakness, buy support, sell resistance, step aside for earnings are a just a few chunks of wisdom that have stood the test of decades in the market.  Yet, most traders do not accept this wisdom and must “prove it to themselves”.  That’s fine. Just realize proving it to yourself will cost you tens of thousands of dollars, a lot of wasted time, and countless heartaches.  

Companion Video

24 min video covering the indexes, FAAMG names, Existing positions and new swing trade ideas.   Run video at 1.25x for faster playback ( I talk slowly )

Earnings

The peak of earnings season was last week, but still plenty to go.

News Flow

  • Is the US as business broker? Trump floats idea that the US Govt should get a “finder’s fee” for any TikToc  M&A transaction
  • China warns it won’t tolerate a TikTok “Smash n Grab” by the US
  • BP cuts divvy for first time in a decade; stock soars
  • GOOGL takes advantage of low rates; raises $10B in bond sale

 

AAPL prints an ugly candle

Boom in BK’s

The Citi Surprise Index begins to roll over

On Stocks and Fund Flows

Tick Tock for TikTok

So TicTok is now “on the clock” and supposedly faces a hard deadline of Sept 15 to either sell out the US portion of the business or be banned.  Pres. Trump reverted to real estate mogul role and suggested the US  get a broker fee for setting up the deal.   The real thing that’s on the clock is Congress as the US economy will begin, if it isn’t already, feeling the pinch of enhanced covid benefits rolling off.  As it currently stands, no one is blinking and the stalemate continues. We can probably look forward to something late this week or next week.

I said a couple weeks a go that we might get soggy beforehand, but that a deal gets done. I still feel that way. Just guessing of course but looking for something in the $1.5-$1.75 T package. The Republics don’t get a $1T deal and the Dem’s don’t get a $3T deal.  THis should be the last one prior to the election. Both sides need to get it right. Either way, its the market reaction we’re interested in.

August can be a rough month for stocks. It’s not unusual for a rug pull. THat coupled with the graphic just above showing that its more than common that vol increases into an election. We’ve got the covid relief package mess and a big payrolls print on Friday. Plenty of reasons to be anxious or nervous here. But lets set that aside. We are leaning bullish based on the price action and we do not have a ton of positions so our exposure is in line. We can play short term bullish trades for added exposure. We can turn bearish in all of 2 min if we get a signal to do so.

Let’s maintain our bullish posture despite warning flags that may have us uncomfortable. We can exit at any time if price tells us to. As it stands, we may get another FOMO push if we break to new highs in QQQ and SPY breaks above $329.

Strategy & Tactics – No Changes

Bulls in control until Bears prove otherwise. 

  • FAAMG – Continue to Watch closely for bullish or bearish price action following earnings.
  • Covid Relief Bill and July unemployment print on Friday are the big macro factors on the board for this week.
  • Markets seem poised for a FOMO run. Watch for QQQ breakout to ATH and SPY breakout above $329 to spark another rally.
  • Massive GDP contraction and bump in initial jobless claims met with a collective sigh by markets. No effect. 
  • Risk off Assets flashing a bright yellow light but to date, yellow lights have not slowed anyone down
    • GOLD / BONDs and / USDJPY currency pair are flashing a problem.  Eyes wide open.
    • Gold a crowded long; $USD a crowded short.  A toxic sentiment mix primed for a reversal.
  • 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

SPDR Sector Technical Review

30 min video that identifies the key trading locations on the indexes.  HERE

FAAMG Live Annotated Charts

Click on the Links to view my annotated live charts

FB                  Daily

AAPL            Daily

AMZN          Daily

MSFT           Daily 

GOOGL       Daily 

Active Trade set ups / Positions

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

$TLT – Initiated Sept 170 Calls on Aug 3

$UUP – Initiated Sept UUP Sept 25.50 calls  Aug 3

$AMD –  gappy bracket trade set up; raise stops and strikes if long from lower levels

JMIA –  I am parked in Aug 20 Calls; keep rolling and protecting as you go into earnings Aug 12. Stay long. . 

$CCL / RCL / NCLH  Cruise lines getting soggy again and outright sell signals close

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

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

$COST: Flagging above support but little movement

$YETI –  Trading $51; We’re long from $45. we got the pre-earnings pop.  Earnings Thursday Aug 6  BMO   Time to exit

$PZZA –  We’re up $10; EARNINGS AUG 6 BMO  ; Make sure you get paid on this.  Time to EXIT

$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 – Near $405 which is the gap entry for a potential $25 gap fill. ALARM.

$SAVE – Fresh Short alarm trigger yesterday. Still viable entry.   Airlines soggy

CHEF – Lost $12 on Friday triggering a SELL signal; Earnings in rear view

$DDS –  drifting  Like it long against 22.50; but short against $22.50 on a break below.  Decide how you want to play.  No position yet here.

$FIZZ –   We are out 

$OLLI –  Active Bracket trade set up. Alarm $110 for potential breakout to fresh ATH’s; $107ish is the low side of the box. 

$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

$WMT – 20 ema test. staying long. 20ema is line in sand.

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

$XRT – Raise stop to $47.  We’re long against 45.50

$INTC –  I have initiated a position in the Sept 47.50 Puts with a relatively tight stop at 49.50. 

Index Chart Review

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30min

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