Daily Profit Compass August 14

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Tickers discussed: SPY QQQ IWM  GLD TLT CORN JO DBA  FAAMG  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 – Will Return

Companion Video

24 min video covers the indexes, FAAMG, bonds, gold, and several Ag ETFs that are on the move.

 

Earnings

News Flow

  • Congress goes on vacation until after labor day seeing no urgency to get a Covid deal done. Another Jobless Claims Thursday. Print at 8.30
  • Poor Bond auction jacks rates higher; Oddly the banks did not benefit from the rising rates as most traded lower.
  • Meanwhile big cap tech keeps tapping bond market to build cash hoards while rates are near historic lows.
  • The great rotation to Value lasted 3 days.  Time will tell if traders still see opportunity in value.

Rally consistent with other notable great bear market rallies of the past.

Nobody wants to buy PUTs

Top Quartile of Earners not feeling the recessionary pinch

Bond Auction and Value Rotation Fails

The record bond issuance by the Treasury finally caught up to the auction as yields moved higher on the long end of the curve to entire buyers to take the product. This lifting of bond yields should have been good for banks, but the KRE was off about 2% and XLF was off too.  XLI and XLE were also red as the great “back to Value ” rotation lasted all of 3 days.  One day doesnt make it a forgone conclusion that the value trade is dead, but we have seen the movie before.   Let’s see how they wrap up the week.   Retail sales print at 8.30am this morning may set the tone for the day.

Strategy & Tactics –  

IWM was soggy as Value backs off.   IWM is a good proxy for the cyclical trade. If the value trade is real, we should see IWM take out $160.

  • 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:  Do traders rush in on the dip?   
  • 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

FB                  Daily

AAPL            Daily

AMZN          Daily

MSFT           Daily 

GOOGL       Daily 

 

Charts of Interest

$GLD 60 min

Prices rallied to challenge the gap at $184. While it is not my base case, a move back into the gap must be respected and it would be objective to get long with a stop just below. Closing an over head gap would not be the weirdest thing that ever happened.  $177 is the next big layer of support.

$TLT – 60min

A poor bond auction drove yields higher and bond prices lower. Unless prices can quickly recapture $165, a move to $162 support is favored. That $162 would be an objective place to try a dip buy at the low end of the range. A break however would favor a move to $159.  The levels are very clear.

 

Active Trade set ups / Positions

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

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;  – 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. Killed on Earnings off 20%. May jump back in if price pulls in to solid support. 

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

$COST:  Watching carefully. Price is lower than my exit at $340 but happy to jump back in on a good set up. Measured more target in mid $350’s

$DDS –   Moonshot on the short squeeze coming out of earnings. 

$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.

 

Index Chart Review

SPY  4 hour

Longs have nothing to worry about as long as price stays within the channel. Get more concerned if price drops and begins closing below.

SPY 30 min

QQQ 4 Hour

Like SPY, the Q’s are back well within the channel.

QQQ 30 min

IWM 30 min

Price found support at $156.50. Moves below favor a back test of $155.

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