Tickers discussed: SPY QQQ IWM AAPL AMZN AAXN AMD BA FE SDC
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
GM / QCOM / TWLO / TWTR / WYNN / UBER coming up
Headlines
- US Futures pop on headlines of a Corona Virus breakthrough
- Corona death toll at around 500 as cases continue to build.
- Multiple cruise lines have customers held hostage as they try to determine if Corona is on board.
- NKE warns saying Corona will have negative impact on China operations.
- Macy’s to close 125 stores in make-over to get leaner
- Buttigeig seemingly wins Iowa but the caucus debacle saps momentum
Learn to Swim
Another big gap up this morning on reports of a Corona vaccine breakthrough in China. Although it does not make for good copy in a market letter, I suggest ignoring the headline noise. If you simply focus on price, you’ll find yourself more profitable and advancing your progress more quickly vs. letting the noise infiltrate everything. Corona is still following its exponential growth curve. We were at 9000 Friday, now well over 20K 5 days later. I hear reports that people are going back to work Feb 10. 5 days from now. We will see if all the person – person contact spikes the case load. Meanwhile our focus on price will let us know if any of it matters compared to the ocean of liquidity Powell is producing.
This morning I go over the indexes as usual, then I re-visit a bunch of charts from our recent review.
Index Chart Review
SPY Daily
Price in the premarket is trading just below the prior highs and overhead resistance. If price breaks above $332.60, traders can buy the All-time high with a tight stop below. Very objective and low risk long despite open gaps below. If you do indeed buy the ATH, your stop is just below today’s opening price. Any move into this mornings gap from above risks a gap backfill to yesterday’s close at $324.12.
SPY 60 min
Bulls – Price currently set for a gap open higher and just below ATH. Bulls can buy the ATH w/ a stop just below. It also offers a nice opportunity to book some profits and reset things above the prior high which should provide support on any backtest.All bets are off if the prior high is rejected and moves into the unfilled gap below.
Bears – If price is rejected at prior ATH’s it is objective to try a short against it and hope for a fill all the way back to $324. If price breaks above the prior all time high, dont waste your time of money trying to short new highs.
QQQ Daily
With price at all time highs, it’s tough to find an objective place to get in with 3 successive gaps higher. The only suggestion i can offer is to set a stop somewhat below your entry with your risk tolerance in mind.
QQQ 60min chart
Bulls – Above $222.50 and the downtrend line are bullish. Simple as that.
Bears – Get short on a price move back into the open gap from above.Your target is a gap fill to yesterday’s close at $227.47
IWM Daily Chart
Price set to open just below $168. Traders can either enter long off the open w/ a stop just below or wait for $168 to be taken out, then set your stop just below $168. The Target in either case is $170.
$IWM 60 min
Bulls – Long above $168 w/ stop below. Target $170.
Bears – Get short on a move into the open gap below with a stop just above. Your target is the bottom of the opening gap.
Market Segment Advance / decline %
Friday we saw a somewhat rare triple 90% of issues down across 3 market segments. LG / Mid / SML caps. Despite the big gap up yesterday we did not have any segment post a 90% up day. When we have a triple up day it will negate the prior sell signal.
Trade Set ups and Ideas
$AAPL 60min
Set to open around $323. Any pull back to $320 can be bought with a slight stop below. There is good volume / price support at $320.
$AMZN Price is wrestling with the all time high at $2050. On a breakout above $2050, get long against $2050. Very objective level. You can view this level simply as a trade or multi month or even multi year trade depending on what your goal is. If the breakout is legit, price should not come back much below $2050. Where you set your stop will depend on what you want to do. Bears can get short this if there is a false breakout and / or price falls back into the open gap below $2000. THe gap is $140 wide and would be your target.
$BA If you are short, close your position if price pops back above $320 by any appreciable amount. $320 is the bull / bear event horizon line. Bears live below, bulls above.
$AAXN Stock looks great. Roll your stops higher to between 79 – 80. Great find. Turbulence barely touched it.
$AMD Traders can go long on a break above $50 which was a key level. Set a stop just below.
$FE Beautiful $2 measured move with even a bit of a bonus. Longs should be wary of the gravestone doji print yesterday. A red candle today foreshadows a deeper pull back. If you were long just for a trade, Watch it close today. Punch it out for the win if you see red.
$SDC Still holding $13 and still is a viable long. If you’re not already in, you could buy any break and hold above the bull flag w/ a stop just below. $13.50 or so.
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