Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA GLD GDX
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
Companion Video
The video is a detailed technical review of the indexes and FATMAAN names. All the key trading levels are identified along with commentary and trade plans for each ticker. Trade ideas are also discussed.
Run the video at 1.25x to reduce run time.
Find the Video HERE
Are we at Peak Musk?
Yesterday, Elon Musk sent the crypto world into over-drive as he announced TSLA was putting $1.5B of cash into Bitcoin assets that will be held on the balance sheet. He also stated that he planned to make it possible for buyers of Tesla cars to use bitcoin as payment tender. Given the volatility of bitcoin it begs the question that if bitcoin loses 30% of its value, how it will explain the 30% quarterly loss on its balance sheet. We’ll cross that bridge when we get to it I guess. Musk is entering the zone where he was when the SEC called him in for a chat. He is everywhere. Not sure what it means but if Musk were an actual stock, I’d favor a fade.
The USD and Bond Yields back off: The Dollar backed off its recent run up yesterday. One day does not make a trend, but if you’re interested in dollar-sensitive assets, it is worth paying attention. Also, 30 year yields briefly crossed north of 2%, it was not able to hold the breakout and then traded lower. The same was true of 10 year yields which also backed off. A true test will come tomorrow when the Treasury will hold a 10yr bond auction with a mountain of issuance. That will be followed up on Thursday with 30 year bonds. We may have more info about the near-term direction for bond yields.
Re-Posts from Monday Feb 8
Exploring how Narratives are central to Wall Street
In the most recent “Smarter Markets’ podcast, Dr. Ben Hunt explains the central role narratives have always played on Wall Street. The recent $GME – /WallStreetBets episode is just the most recent example of how narratives can mislead the masses as to what is really going on. Dr. Hunt explores how the advent of social media has turbo-charged the phenomenon and has made the consequences that much more dangerous. I recommend you listen to the 60min program. It’s important to recognize and be able to discern these narratives as they’re being fed to you.
Find the podcast HERE
Elevated Risk Environment Trading Game Plan / Actionable Activities
- Simply recognize the market is highly vulnerable to a massive rug pull and that you wont be able to, nor should you try to anticipate it.
- Stay long but not ludicrously long; with market risks elevated find a balance between long and stupid long and dont cross the line.
- Resist the temptation to achieve immortality by trying to short the ATH top tick. You will likely be throwing money away.
- The “Valuations are stretched” train left the station a long time ago. Fundamentals dont have anything to do with the market action. THis is a liquidity-fed momentum market. It will work until it doesn’t.
- Aggressively “Roll and Protect” your longs by rolling your deep in the money positions to at -the -money strikes. Thus continuously banking winnings while keeping your risk profile relatively constant.
- While a potential rug pull will happen quickly, we will see it. In order to have a sell off price has to lose the 8, 20, and 50 emas. We will see each as they happen in real time and have an opportunity to react. The key is to not stick your head in the sand. Trust your charts; react quickly, decisively, and defensively. If, like in the case of $GME fallout it turns out to be short-lived, re-establish longs. Remember, had last week gone another way, we could be testing the 200ema instead of being at ATH’s. You dont want to be holding the bag if / when the floor falls away.
- Stay nimble! Don’t lock in on any one particular narrative to the exclusion of others Remain flexible and fluid.
FATMAAN Names
In the companion video, I cover off the FATMAAN names using the daily timeframe. In recent days the FATMAAN names have again turned soggy and lifeless. THis can make for frustrating and sloppy trading. If yu are interested in these names I suggest setting some alarms at locations where either there would be a clear breakout or breakdown. This will increase the odds of a meaningful move you can profit from.
INDEX CHARTS
A detailed walk-through of the levels and trading strategy for the indexes is given in the video ( link above) . The static charts are provided for reference. The FATMAAN names are also reviewed in the video.
SPY 2 hour
SPY 30 min
QQQ 2 Hour
QQQ 30 min
IWM 2 hour
$IWM 30 Min
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