Tickers discussed: SPY QQQ IWM SMH, AAPL, FB, MSFT USO
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:
More isn’t better
Many aspiring traders long to become a full-time trader. I am not sure why. I think that many equate “full-time” with successful. Not necessarily the case. More screen time often leads to over trading and poorer results. Now with commissions getting whacked, there are even fewer barriers to over trading. The added screen time often leads to traders getting away from what they do best, maybe out of boredom. For instance, a trader who has done exceptionally well trading the daily time frame finds themselves trading a 3 minute chart and getting eaten alive. Just one example. So while I would certainly help anyone who wanted to pursue FT Trading, there would be a lot of questions about their motivations. More isn’t always better.
Earnings Calendar
Headlines
- FOMC’s Powell to face the Senate side of Capitol Hill today and Sen. Rick Scott’s pre-published hardball asset bubble questions. Might be entertaining. Also, have you noticed when Powell talks, the market gets twitchy?
- Tuesday, Powell suggested the FOMC might run out of ammo in the next recession.
- Sanders takes N.H. primary with Klobuchar getting a surprising pop to finish 3rd. Onto Nevada and South Carolina. Biden acts like he has Corona….low energy and tired all the time.
- China cancel’s / postpones Formula 1 Grand Prix race on Corona.; The cruise ship with infected passengers has been rejected entry at 5 ports. The ship passengers remain hostage with “no where to go”
- Oil trying to clear and hold $50. Inventories at 10.30am
OMG! We actually filled a gap!
Yesterday was the first time in a long time we filled an opening gap on the same day. Wonders never cease. We actually had some 2 way price discovery for the first time in a long time in the Gap-Camp- Ramp era. I am going to blame ( or thank ) Powell. Doesn’t matter what he says or when he says it, the market always gets weird and loses steam. We may see that again today as Sen Rick Scott has his question “bazooka” loaded and ready for Powell. Might be fun and informative to listen to. Otherwise news flow is slow. No big Corona developments. Not a lot crossing the tape this morning.
Is Oil setting up for a long?
Oil is oversold and has been pinned below $50 for about a week. Intra-day pops above get faded back below. I will be watching inventories this morning to see how price reacts. From a chart perspective, notice the double bottom with bullish divergence. This is usually a money set -up for a long but Corona overhang may over-ride technicals. I have USO alarmed at $10.65 for a long entry but I wont front run the inventory number. Watching closely.
$MSFT Bad Day at the Office
MSFT had a bad day at the office yesterday. THe stock popped to ne highs off the opening bell but then they put an all-day $5 fade on it. From the chart you can see the 60min uptrend has been violated. THis puts the stock on a 60min sell signal. There is some support at $184, but below that $180 is the 60min bull / bear pivot. If $180 is taken out it would be a place where bears might become motivated. If $180 holds, it would be a good place to try a long.
Index Chart Review
SPY Daily
Price filled the morning opening gap to the penny. It Trader’s on the daily time frame can use $334 ( 60m support shelf), $332 ( Friday close), $331 ( Monday break up candle low ) or even the rising 8 ema as stops depending on how tight a leash you want to keep things. Find objective locations to get long. With price well above the bullishly configured 8 and 20 ema’s, hard to get too bearish.
SPY 60 min
Bulls – Traders can buy a re-capture of $335.50 and / or a breakout above $336.50. Back tests of $334 and $331 can also be bought w/ tight stops. Traders should remain aware of opening gaps higher leave the door open for a flash gap fill lower. A nice opportunity to buy at lower prices if you get it. Stay long. Price action is bullish.
Bears – Congratulate yourself if you caught the gap fill. It wasnt particularly easy so if you got it, well done. To my eye $334 looks like a place to be interested in on the short side. A break below should find $331.
QQQ Daily
They parked price on $232 which is a key spot. Bigger picture, as long as $230 holds bulls are fine. Below gets more iffy. If price were to find $230, it is worth a long entry w/ a tight stop. Below $230, the break-up candle low at $228.30 that holds would be a place be a place to try a long. Below that, here comes $227.
QQQ 60min chart
Bulls – Nimble traders can be long against $232. A break below favors bears on a short-term, tactical basis. THe support levels below are clearly marked and offer attractive long entries at lower prices.
Bears – A price break back below $232 looks like the first reasonable chance to objectively get short for a tactical trade. Emphasis on tactical….bulls are controlling the tape. .
IWM Daily Chart
Pretty simple….price needs to take out the breakdown candle high at $168 to get going and open the door for $170. If you’re long from lower prices, I would not want to see a daily close below $165.50. Below $164 and I’d think we were going back to $160 for a back test of support.
$IWM 60 min
Bulls – $166 and $166.50 are places you can either add or initiate longs as those levels are taken out. Your near term target is a move to recapture $168. Buy any move above $168 and look for $170.
Bears – A move back below $164.50 would be outright bearish. A move in that direction brings all the open gaps back into play.
Trade Set ups and Ideas
$SMH 60m
Bull flag action suggests a measured move target to $152 on a break above $149.50.
SMH is a “risk-on” group. It should advance with QQQ. Any weakness in Semi’s is cautionary for QQQ. A breakout here would be supportive of a further advance in QQQ.
$AAPL 60m The triangle perfectly contained price further validating its importance. Price needs to hold $319 or lower prices are favored. Ok to try a long here with a tight stop, but be aware, bears will feel some motivation below $319.
$FB 60m Yesterday’s downgrade foiled the gap entry trade. Now $207 is the key level. Holding $207 keeps short term bull hopes alive. A break below favors a back test of support at $201. From a trading perspective, $FB has been soggy since earnings. From a risk / reward stand point, I’d probably lean bearish and sell a break of $207. I will most definitely be interested in buying a gap entry. Between $207 – $212 may be a choppy frustrating long as price builds a base for a potential move higher. All conjecture but I do know $207 is the short term key.
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