Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA EURUSD CRM EWZ
The Daily Profit Compass provides stock market technical analysis for the stock market today and is focused on the indexes and FAAMGs. Key levels and trading locations are provided, along with trading plans and timely commentary to keep you on the right side of the trade.
Earnings
Some marquis / closely watched names report this week. CRM w/ potential commentary on WORK purchase developments; VEEV; TRIP; CRWD; SPLK; OKTA; FIVE; DOCU; OLLI; PD
Companion Video
The video is a detailed technical review of the indexes, FATMAAN names, the EURUSD currency pair and it’s implications, plus a couple of trade ideas / set ups. All the key trading levels are identified along with commentary and trade plans for each ticker.
Run the video at 1.25x to reduce run time.
Find the Video HERE
Huge Breakout in the EUR/USD looks like a game changer
5 Reasons Why EURO Broke 1.20
by Kathy Lien of BK Asset Management December 1, 2020
Against all odds, euro climbed to its strongest level versus the US dollar in more than two years. Not only was the single currency the day’s best performer but it surge well above 1.20, rising to its highest level since May 2018. For many, the persistence of the euro’s rally has been perplexing as there was only one down day in the last six. However we don’t need to dig deep to find drivers for the move:
#1 US Dollar Weakness
There’s no coincidence that the euro’s rally coincides with broad based US dollar weakness. The Dollar Index may be up today, but it is still trading near 2.5 year lows. Concerns about a spike in coronavirus cases after Thanksgiving and Federal Reserve Chairman Powell’s promise to keep interest rates low until there are actual signs of inflation gives investors very little reason to buy dollars. We saw that clearly today as the greenback extended its slide against most of major currencies despite the whopping 11% rise in 10 year Treasury yields.
#2 Stronger Eurozone Data
Stronger than expected data also lent support to euro. Germany reported a surprise drop in unemployment rolls that helped ease the unemployment rate. Manufacturing PMI for the Eurozone was revised higher, offsetting the sting of lower inflation. While the European Central Bank is widely expected to add stimulus next week, this plan was clearly telegraphed allowing investors to fully discount the move. Therefore even though the prospect of ECB easing is negative for euro, the lack of surprise may actually be positive for the currency.
#3 Europe’s COVID-19 Outbreak is Slowing
Last month’s aggressive lockdowns in Europe are finally bearing fruit as there are signs that Europe’s COVID-19 outbreak is slowing. New virus cases in France fell to 4,005 on Monday from a peak above 86,000 in early November. Virus cases in Spain are just above 10,000, down from more than 25,000 on October 30th. In Italy, there were 16,370 new cases yesterday compared to 40,902 on November 13th. The numbers are better in Germany as well but more volatile. The US on the other hand is bracing for the worst as test results from Thanksgiving gatherings start to come in.
#4 Stocks are Rallying
Yet despite all of the worries about a second wave, the S&P 500 and NASDAQ hit a record high on Tuesday. With Europe gaining control of their outbreak and moving closer to easing restrictions, the region stands to recover at a faster pace. As a high beta currency, equity market gains and improvement in risk appetite plays a major role in euro’s rally. If stocks continue to rise, so will the single currency.
#5 Technical Breakout
Last but certainly not least, 1.20 was a very significant technical level for EUR/USD. We can tell from how quickly and aggressively the pair moved higher once this level was broken that there were many stop orders right above 1.20. In a matter of seconds, EUR/USD jumped more than 20 pips and in less than an hour, it was trading nearly 50 pips higher. The next level of resistance is now the September 2017 high of 1.2093.
Major Beneficiaries of a Rising EURUSD Currency Pair
- Precious Metals ( all of them ) plus by extension the miners
- Commodity Complex… Everything. Iron Ore, Oil, Copper, Softs
- VALE / RIO / BHP / SCCO / FCX / AA / XLB complex / XLE complex
- Commodity Exporting Nations EWZ / EWA / EWC
- US Exporters / US Multinationals with oversized overseas earnings
- In general $EEM complex
Who’s Hurt?
- In general, European exporters to the US. You’d normally want to go after VW, BMW, Daimler but they all have US domestic production now so while probably a headwind, not a death blow.
- The price just went up for US Importers of Euro-based products
- Pundits who act smart seem to think the Euro area can handle a EURUSD of 1.25 -1.30 before the ECB gets panicky.
$EWZ Weekly – Long Trade Idea Follow-up from Nov 16
3 weeks ago EWZ was a long trade idea. I still like it long and think it goes higher. On a move above $35 I like looking out at least 3mo to March and buying the March 35 calls. Traders are welcome to adjust strike and expo to fit their trading style / objectives. I see no need to front run this. We could easily see a mini-consolidation here below $35 for a couple weeks. Once Price breaks out, you can get long with a stop just below $35 and let it grind away as the world re-stocks covid-depleted inventories
$CRM Tests a Critical Spot
As is often the case, traders have faded $CRM since the announcement of the $WORK acquisition. Earnings were reported last night and the stock took another leg down and is now expected to open on key support and sitting on a $15 gap. THe stock sets up well for both active traders and for a potential swing trade. $230 is the immediate pivot. A break below favors a gap fill to $215 and likely tag of the 200ema at $213. A move to $205ish may also be in the cards. As long as $230 holds traders can be long with a stop just below, but on any break below $230 get short and look for a down move to fill the gap.
INDEX CHARTS
SPY 2 hour
SPY 30 min
QQQ 2 hour
QQQ 30 min
IWM 2 hr
IWM 30 min
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