Daily Profit Compass February 20

Tickers discussed: SPY QQQ IWM GLD GDX GDXJ SIL NEM KGC PAAS WPM

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:   

Morning Routines

 

 

 

 

Normally I advise aspiring traders to develop a sustainable pre-market routine that they love. Those in “performance” careers, and who are successful, all have finely tuned pre-shot or pre-performance routines. Jack Nicklaus always “ran the movie” visualizing the shot before addressing the ball.  He also rented the same small house at the Masters in Augusta for 30 years. Opera singers sing the scales to warm up and have their own pre-performance program of preparation. We as aspiring traders need to do the same. Develop a routine that is almost robotic. A routine that you do automatically that gets you prepared, motivated, focused and “in the zone” when the bell rings. I will agree with Daily Zen in the sense that changing your routine will “wake you up” and possibly open your eyes to new opportunities. Certainly worth a try if you feel your routine is stale or somehow not doing what you want it to do. I would endorse incremental change to explore new possibilities. Maybe what you discover will become part of your “core” pre-market routine in the future.

Earnings Calendar

Headlines

  • Gold pops to 7 year highs; Silver and other precious metals advance
  • Euro and Yen weakness fuels $USD run
  • Bloomberg bombs in his Democratic debate debut as a re-energized Warren shined and as front-runner Sanders avoided trouble.
  • AAPL considers letting users have more flexibility to choose / replace default iphone apps
  • So. Korea reports first Corona death.
  • $LB selling off Victoria’s Secret to private equity for $1.1B
  • $MS set to buy E-trade …..E-trade stock is halted in the pre-market

Gold Shines

Good News and Bad news on Gold.  The bad news is that I feel like I missed the optimal entry to get long gold. The good news is that I think gold is just getting going and that there is still time to participate, especially with the miners.  So this morning, I review the charts and offer trade ideas.

The broad markets continued its advance yesterday led by what else, the Nasdaq.  FAAMG names, including AAPL, continued its leadership. IWM stalled at an important level and is flashing a double top set up at $169. We’ll need to watch that closely.  Virgin Galactic $SPCE  continues it’s wild trading with +/- 20% intra-day moves are becoming common place. If you’re an active day trader you’re probably all over this already. Certainly a great way to keep yourself entertained. With no revenue and no customers its hard to see this as anything more than a trading vehicle near-term which is fine; we’re here to make money and there is certainly money to be made in this stock both on the upside and downside, sometimes in the same day.

I don’t have anything particularly enlightening to offer you this morning. Although futures are modestly red this morning, nothing particularly scary. Continue with a bullish bias with the complete knowledge and awareness of the building risk of a liquidation break or pull back. That is what stops are for. Keep dancing while the music plays and position yourself near a fire exit in case you smell smoke.

Index Chart Review

SPY Daily

Nothing to do for those on the daily time frame with price above all the key ema’s and at the highs.  The rising 8 and 20 emas will act as support on any draw down. Traders can stay long against  $338. 12 and or yesterday’s gap support at $337.48.  Calibrate your stops to your time frame  and sensitivity to draw downs.  $332 meets the eyeball test as an important level where both the 20ema and lateral support coincide.

SPY 60 min

Bulls –  With price pennies off new highs and futures red,  bulls should probably throttle complete FOMO, even though FOMO has been a good trade since October 3. Simply waiting for price to pull into gap support or a key moving average will give you a bit of a cushion vs buying every last top tick.

Bears – Use rejections at resistance and breaks of support as your trading locations. While certainly possible to profitably trade on the short side, only the best have been able to do it recently. THe uptrend has been strong with almost zero follow through to the downside. Continue to view shorting as a tactical trade that will likely only last a few hours, not weeks.  THe levels and trade plan are clearly marked on the 60min chart and for the most part the levels have been spot on.

 

QQQ Daily 

You can see that price is above the daily uptrend channel as I’ve drawn it. As long as that is the case, no worries for bulls; nothing to do.  If / when price drops back into the channel the 8ema is first support followed by $230.30. Any moves below $230.30 would likely target the bottom of the rising channel.

 

QQQ 60min chart

Bulls – The gap left behind by yesterday’s open are the first levels of interest and are marked on the chart. If the past is repeated the gap will hold as buyers of the micro dip step in. If price breaks through the gap to the downside, $233.40 is first support below the gap.

Bears – A break below the gap would be encouraging for bears, but keep in mind, short ideas remain counter-trend trades until further notice. If you’re nimble and active you can make money but keep risk under control and stops tight. Breaks of support at the key levels are places to add / initiate short position.

 

IWM Daily Chart

$169 has emerged as a key location with price failing to break through on multiple tries. Unless price can clear $169 and hold it, bull ideas of taking out $170 and powering above the 2018 highs will be on hold.

 

$IWM 60 min

Bulls – Real simple. Above $169 opens door to $170 or higher. Presently chart is flashing a double top with bearish divergences on RSI and PPO supporting that thesis. Bulls can try to buy $168 first support on a pull back, but a break below $168 would tilt probabilities to the bears short term.

Bears – Sell a break below $168. 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.

 

Gold: $GLD

We missed the breakout from $150. Now traders either need to wait for a pull back to $150 to enter or buy at present levels with a stop at $150.82 which was yesterday’s low.  IMO Gold is in a bull market so time frame is everything. If you’re willing to look out 4-6mo a dollar wont make much difference. I think it goes higher over time.  All this is happening with equities at all time highs.I’d expect any pullback to be rocket fuel for gold

Miners: $GDX

GDX has lagged a little behind gold on this most recent thrust. That may be the opportunity. Buy a break above $29.75 and look for $30.75 as T1. A break above the most recent high gives GDX room to run. $1700 for gold is no longer a fantasy target; anything close sends GDX much higher.

Junior Miners: $GDXJ

You can see the clean breakout. The cup n handle projects a 20% move. GDXJ will be more volatile than GDX.

Gold and Silver Miner Chart Blast

I picked a few charts in the space to highlight for your review that may be of interest.

 

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