Daily Profit Compass February 19

Tickers discussed: SPY QQQ IWM USO WTIC TLT AAPL FB DIS

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:   

 

 

We’ve talked about it many times but we’ll continue to talk about it. Pain is the universal force that drives behavioral change. Success teaches us very little. That is why it is quite common for the aspiring trader to make nice, healthy gains, even phenomenal gains then see those gains evaporate just as quickly. Next to nothing was learned on the run up. It is in the crucible of pain mixed with effort to overcome adversity and defeat that strength is created.  If you bother to take a look through history you’ll find the great ones faced agonizing pain and managed to overcome it. From Abraham Lincoln who failed at everything he ever tried until he became President, or the latest “overnight sensation” in Hollywood who spent 10 years wandering in the desert waiting tables you’ll find a burning desire to overcome the pain. So it is for we aspiring traders. Guard that capital, play the long game, learn from the losing trades. Keep at it. Find your strength.

Earnings Calendar

Headlines

  • Market shrugs off $AAPL warning; FAAMG remains unfazed
  • Adidas & PUMA say their demand in China has been pummeled; So when does $NKE make their announcement?
  • Safe Havens advance with market. Gold clears $1600; $TLT approaches prior high; $USD relentless march higher.
  • Oil bounces as supply risk creeps ahead of demand fears; Oil Inventories at 10.30am
  • FOMC Minutes to be released today at 2pm may reveal plans for the Fed’s balance sheet

The Song remains the same

As far as I can tell, nothing has changed in this market; The Song remains the same.  Not even Apple’s profit and guidance warning was enough to knock the market off it’s game for more than 3 hours. Mini-micro dips all get bought and prices rise. It’s interesting to see the safe havens like gold, the US Dollar, and TLT advance nicely in the face of a market at all -time highs. Notice I said interesting, vs a dire warning. Non-correlated assets have risen together before so this isnt unprecedented. I think a good rule of thumb is to simply take that info as a puzzle piece. With no weakness in equity prices, the rising safe haven puzzle piece does not fit. If we see the indexes display a meaningful amount of weakness then maybe we will have a place for it.  THe safe haven rise may have more to do with anticipated Fed policy than a particular problem with equities. Keep in mind that stocks, especially tech love low interest rates. So the relentless bid for yield may be actually fueling the tech advance as much as the liquidity fire-hose from central banks.

Maintain a long bias while keeping your head on a swivel. Keep exposure within reason and stops near by.

Index Chart Review

SPY Daily

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. Traders can buy / add to / start new SPY long positions on a break to new highs above $338. 12.  If you do that and you’ve been long from lower levels, raise your stops.   Know your exit points if / when a pull back happens. $332 meets the eyeball test as an important level where both the 20ema and lateral support coincide.

SPY 60 min

Bulls –  Buy a breakout to all-time highs or a pull back to $335 first support with a hold. If / when we pull back to test the 20ema, I expect to see conditioned dipsters to step in with buy orders.

Bears – I moved support down to $335 as breaks below $335.50 proved to be head fakes. Although most bears have left the building or are dead, if you’re still willing to try, a break below $335 should open door to $334. A break below $334 opens door to a 20ema test at $332 ( daily chart )

 

QQQ Daily 

The $AAPL induced micro dip was bought faster than lightning as price continues to walk the top rail of it’s uptrend. For those on the daily trend no cause for much concern until / if price drops below $230.30. That is first support. Price could fall to $228 and still be within the uptrend channel which would still keep the outlook bullish longer term.

QQQ 60min chart

Price has formed a consolidation box between $233.40 and $235.

Bulls – Buy a break above $235 for ATH’s and look for $237. On pull backs, look for support / buyable dips at $233.40, $232, and $230.30.  On any entry , set a tight stop. IMO $230.30 would be a high probability entry for a bounce play. Below $230.30 bulls need to step aside as a move to $227 would be favored.

Bears – A rejection of $235 or a break of $233.40 look like the first objective shorting locations for the nimble and brave. Short ideas that have actually worked have been few and far between. That will eventually change, but don’t lose all your money in the meantime.

 

IWM Daily Chart

Price needs a break above and hold at $168 for higher prices and a potential run at $170. If you enter long at $168, set your stop just below. For those long from lower prices I would not want to see prices slip below $166.50. Below $164 should be a get-out-of-dodge moment. Below $164 and $160 comes back into focus for a potential back test of the prior low.

$IWM 60 min

Bulls – Buy a break above $168 and look for $170. I am less confident about buying dips on IWM as it has been a relative laggard compared to QQQ / SPY.  If you want to try and buy a pull back. $166.50 looks like a good spot to try.

Bears – A rejection of $168 or breaks below 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.

 

Oil: $WTIC and $USO

Last week we discussed that a breakout of USO above $10.65 opened the door to $11. That objective has been achieved. Now $11.20 and $11.45-$11.60 are the next objectives. Use the uptrend line on the USO 60m chart as a guide for your long.  On $WTIC I expect the rally to die with OH resistance, the declining 50ema, and the 38.2% fib zone all converging in and around $55.  That would be a prime location to look for a shorting opportunity and / or take profits on your longs from lower levels.

Bonds: $TLT

Yields continue to drop as growth fears and the safe havens hold the bid in Bonds. The door is open for a run at $148 to take out the prior high. I still think you can nibble on dips.

 

Trade Ideas and Set-ups

$AAPL 60min –  $320 is buyable w/ a tight stop. Prices below $319 get more iffy.

$FB 60m – Stay long with this gravy train trade if you’re in it. Details highlighted in the chart annotations.

 

$DIS  Weak technical posture with the PPO rolling over at a low level. Price is in no man’s land so IMO there is no immediate trade. Based on the indicators, I favor another test of the 200ema, then a possible fill of the open gap. Keeping an eye on it. Things would perk up for the bulls if price could clear the OH ema’s at $142. No touch for now.

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