Daily Profit Compass February 13

Tickers discussed: SPY QQQ IWM 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:   

Will return

 

 

 

Earnings Calendar

Headlines

  • China “fires” the Provincial Governor and Wuhan Mayor as Corona cases spike 15K overnight to 60,000 and death toll tops 1300.
  • Bottom drops out from under Chinese car sales, already on a 15mo decline, as Corona digs in.
  • Powell Congressional testimony yielded no new information or fireworks.
  • British banking regulators open probe into Barclay’s CEO relationship with Jeffrey Epstein.
  • Deutsche Telecom, majority shareholder of $TMUS,  now wants a better deal to buy Sprint.
  • Mobile World Congress cancelled as key participants drop out.

Corona’s Back in Town

So Corona roars back after the market and many market participants put “peak Corona fear” in the rear view mirror. Been saying this for a while, but I don’t think China has any idea what it has on their hands and to what extent.  If it does know, they will likely not tell the truth about it. The US has offered aid and expert medical assistance to China that has yet to be accepted.  I’m sure that China simply doesn’t want the outside world to get a peek, OR to preserve their national pride want to prove that they can solve the issue on its own. I Still think it gets worse before it gets better. That however is nothing to trade on.  We’ll need to follow price for that.

So this morning, US markets appear set to open 0.65 – .85% to the downside.  To put it in perspective, giving back yesterday’s gains. A cheap reminder to those that went all-in on the bounce that there are still risks out there….Corona is just one of them.  On the bullish side, Shock n Awe liquidity will be thrown at the problem.  Liquidity has been keeping the hounds at bay so far. Take it day by day traders. Don’t try to predict the future. Let price lead you to the destination whether it be up or down.  Price is still above the 8 ema so not a whole lot bad things can happen short term. If / when price drops below key ema’s we will change our posture and positioning.

Is Oil setting up for a long?

Yesterday a “whale” sold  29000 USO March 10 Puts to help finance 29000 USO March 11 calls in a massive risk reversal betting on higher oil prices into March.  That looks wrong this morning as oil is trading down on Corona-fed demand fears.  Price above $10.65 on USO keeps the door open to $11.11.   Below $10.65 and it gets more iffy for bulls.

Index Chart Review

SPY Daily

For those on the daily timeframe, absolutely nothing to do unless price loses the daily pivot, first support, and the 8ema  at $332. With price currently at $335ish in the premarket, it would take another 1% drop to test that level.  Sit taller in your chair when / if price reaches $332. Could end up being a place to buy if it holds.

SPY 60 min

Bulls –  If price holds $335.50 nothing much to do if you bought that level yesterday. A break below favors a move to $334. Be aware that there will be a gap above on the open. If price opens above or recaptures $335.50 you can be long against it.

Bears – Be aware of the OH opening gap which they may try to flash fill. You can be short against $335.50 if it breaks. Your downside targets are $334 and $331.

 

QQQ Daily

Daily time frame traders need to sit tight. Nothing to do unless $230.30 breaks which is where the 8ema, daily pivot, and first support lie ( more or less ) . A simple backtest of the breakout if that level holds.  Below $230.30 sit taller in your chair and pay attention more.

 

QQQ 60min chart

Bulls – Price is above $232 in the premarket. A break below favors a move to $230.30 so if you are trading short time frames, $232 is your bull / bear pivot.  I expect at least some bulls to defend 230.30.

Bears – A price break back below $232 looks like the first reasonable chance to objectively get short for a tactical trade.  First target = $230.30.  A break below $230.30 would be a place to lean into a short with the first target being $227.

IWM Daily Chart

$168 is the key level for higher prices. Today, price will open well below. Price has a pretty clear path to $165 where the 50ema lies. THis will be an important level to hold. Open gaps below all the way to $160 if things fall apart.

 

$IWM 60 min

Bulls – $166.50 is first support. If that level is lost, then $166, and $165.  THose are place you could try a long with tight stop but be careful. IWM, more than QQQ or SPY has shown a willingness to go low.

Bears – 166.5, 166, and 165 are places to initiate / add to new short exposure when / if those levels break. If the snowball gets rolling, a back test of the prior low at $160 would not surprise anyone.

 

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