Tickers discussed: SPY QQQ IWM SDC SBUX TGT BA LEVI
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
- Increasing frustration in US over China’s lack of transparency with Corona virus as Virology Experts have not yet been invited to help.
- $RCL cancels 18 cruises in SE Asia. Warns on 2020 EPS Cruise lines collectively are off about 12% in 2020
- $TSLA prices secondary share offering at $767
- $NVDA shines on ER; lifts semi’s AH
- $ROKU pops on strong holiday season
- $W sees trap door selling after announcing layoffs of 550 people. Shares off 14%
- $FEYE up on $CSCO buyout rumors. Some in the trading room bought March $17 call lottos. The name saw 12x call volume
- Equity Markets are closed Monday Feb 17 for Dead President’s Day; Double check positioning and risk exposure ahead of the 3 day weekend.
Planning for a 3 day Corona Get-away
Happy Valentine’s! Glad you’re here! The market continues to show strength by regularly absorbing overhead supply at the highs. Yesterday the weak opening was gobbled up quickly as FOMO players continue to view micro pullbacks as opportunities to get in for higher prices. Even the late day weakness didn’t really make any meaningful dent in price or sentiment. All that said, it will be interesting to see how truly committed the bulls are heading into a 3 day weekend with Corona developments still very fresh and ever-changing. Unlike 2019, which could be best described as “the year of risk-free Friday’s”, 2020 has been different. This year Friday’s have seen much more 2-way trading and have produced some of the reddest days in recent memory. Like is so often the case, time frame is everything. If you’re trading the daily time frame simply review your positioning and overall risk exposure ahead of the weekend. You may want to raise a little cash from and “random” longs you may have and / or throw on a short-term SPY hedge so you can sleep well at night. That will look smart on Tuesday morning if we wake up to red across our screens. For shorter term traders I dont see much point in carrying a bunch of exposure over the weekend. If market participants see it the same way, you may see some decent selling today. Hard to tell.
Elsewhere the $USD just keeps on heading higher as it approaches 3 year highs. And while the energy experts that Corona will blow a massive hole in oil demand, Oil prices have stabilized for now and is bouncing from oversold positions. Gold and Silver as safe havens have gone dormant in recent weeks and have been oscillating in narrow range. Yesterday saw a 30-year bond auction go off at a world record low yield of 2.06% as the appetite for high-quality paper remains voracious. Friday’s have also been good for TLT longs as there’s been a tendency to pile in ahead of weekends. A quick peek here premarket shows TLT up 65cents.
This market has has been tough to figure out. I think it demonstrates the futility in trying and reaffirms that the smartest course of action is to follow price closely and keep a close eye on overall exposure.
Index Chart Review
SPY Daily – No changes in technical posture
For those on the daily time frame, absolutely nothing to do unless price loses the daily pivot and first support at $332. The rising 8 and 20 emas will also act as support on any draw down. 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 – To my eye, $335.50 is the first meaningful level short term. If we break below yesterday’s close we will probably go back and re-visit that level. A break below 335.50 favors a move to $334.
Bears – Traders can short a break below yesterday’s close and look for $335.50. If you get that and it breaks, look for $334. Understand any down move is counter trend. Bulls in control.
QQQ Daily – No changes
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 – Active traders can be long against $234 and can add above $235. Breaks below $234 favor a back test of $232. If you are trading short time frames, $232 is your bull / bear pivot.
Bears – A price break back below $234 is shortable with $232 as T1. Below $232 favors 230.30. Keep in mind, these are tactical shorts. Trend is higher.
IWM Daily Chart
Price took out OH resistance at $168 and now favors a test of $170. If you’ve been long from lower levels stay long against the rising 8ema. Re-evaluate if price comes back to test it.
$IWM 60 min
Bulls – Stay long against $168 and look for $170. Raise concern on breaks below the uptrend line and $168. Have your stops in place if price weakens.
Bears – Breaks below $168 are worth a shot on the short side. 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.
Trade Ideas and Set-ups
$BA – Congrats if you bought on the break back above $320. TA dictates to close your position at DT resistance around $350. If it breaks above $DT resistance, re-enter for a much longer term hold.
$SBUX – Break into a $3 gap highlighted before. If you bought the gap entry, stay long against $89. For others, buy any back test of $89 w/ a tight stop.
$LEVI Alarm $20.75 for a breakout
$TGT – Target trying to break into its OH gap. If it can break through, the 50ema would make a great level to shoot against.
$SDC – Highlighted as a long idea against $13-$13.50 at a recent chart review. Trade working well. Targets above.
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