Daily Profit Compass February 4

Tickers discussed: SPY QQQ IWM BLL

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

$GOOGL had a negative earnings reaction after the bell. .  Disney, Snap, Match and Chipolte  headline today’s earnings after the bell.  GM / QCOM / TWLO / TWTR / WYNN / UBER later this week. .

Headlines

  • US Futures significantly higher following Asia and European markets.
  • Corona continues to grow, despite measures to contain it
  • Oil, Copper bounce from over sold conditions
  • Google stumbles on earnings.
  • IOWA Caucus process melts down

All Fixed !!

When I arrived at my desk early this morning there was a remark waiting for me in the trading room. “Why are futures up so much?”.   LOL.  My reply, No Idea.  In all fairness my answer would be similar if we were down 36 handles. (  Remember, stop asking why )

I was all ready to write up how price was respecting their  down trend lines across the indexes, discussing GOOGL’s 5% pull back after ER, looking at AMZN teetering on a $140 gap, or oil dipping into the $49’s. Instead, those interesting topics have been largely negated.   Now we can talk about SPY bouncing off its 50ema and tech bulls holding the QQQ’s in its uptrend channel.  Last Wednesday, the title of the Profit Compass was Liquidity vs Corona.  I guess Liquidity won because while I can certainly see a bounce or in-determinant price action, I did not see a 1.2% bounce coming this morning after a strong day yesterday. We are back in Gap, Camp, and Ramp mode. It further drives home “expect the unexpected” mentality required when dealing with markets.  Corona is still out there; it hasn’t gone away.  Maybe the market will view it important or it wont. We’ll have to wait n see. In any event, my first order of business today will be to review my stops on open short positions, most likely close them out, then begin hunting new opportunities.

Index Chart Review

SPY Daily

Daily closes above $328.63 means price recaptured the bottom of the original breakdown candle low and all the moving averages. THis puts price on much better technical ground and thus would be a good line to shoot against on the long side. Prices below $328.63 leave vulnerability to pull backs.  Closes back below the downtrend line return the chart to a bearish posture.

SPY 60 min

Bulls – The downtrend line, $328.63 , $330 are all overhead technical targets for price to recapture. As each level is crossed, it is an objective level to either start or build on a bullish position. Raise stops as each hurdle is achieved.

Bears – You had your chance. Now we’ll see if you have sharp teeth or dentures. You need to push price back below the trendline or at a minimum, halt the advance.

QQQ Daily

Price was pinched between $222.50 and the lower rail of the channel. THis morning, price has gapped well above $222.50 and thus bearish outcomes were averted. So prices above $222.50 are bullish and prices above $225.50 would take out the original breakdown candle high. If this happens we’d be back to all-time highs

QQQ 60min chart

Bulls – Above $222.50 and the downtrend line are bullish. Simple as that.

Bears – To get anything going at all, they’ll need to first halt the advance, then break back below $222.50 for starters.

IWM Daily Chart

$163.50 is a nice go / no go level for bulls. Above ok, below more iffy. If price can clear that level it will have recaptured the 50ema. Traders can then be long against the it,

$IWM 60 min

Bulls – Above $163.50 traders can look for a move to $165 as the first technical target. Then $166.

Bears – Identify the opening gap; then be ready for a back fill should it come. Otherwise, the overhead resistance locations are objective places to try a short. That said, if the strength of the 2 day move is any indication, those attempts are likely to fail. Don’t beat your head against the wall.

Trade Set ups and Ideas

Strategy: If you are or have been long over the recent turbulence, $328.63 area would be a great place to located a hedge against your longs. Use the strong opening to buy some insurance if you have a big portfolio of longs.  Dont be lulled into thinking we wont have any more red days.

$BLL Daily

Ball is in the Container / Packaging sector. A break above sends it toward $77, then the prior highs.

 

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