Daily Profit Compass Jan 15

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Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA DM

The  Daily Profit Compass provides stock market technical analysis for the stock market today and is focused on the indexes and FAAMGs. Key levels and trading locations are provided, along with trading plans and timely commentary to keep you on the right side of the trade.

Earnings 

Companion Video

The video is a detailed technical review of the indexes and FATMAAN names.  All the key trading levels are identified along with commentary and trade plans for each ticker. Trade ideas are also discussed.

Run the video at 1.25x to reduce run time.

Find the Video HERE

News Flow

President elect Biden shared his $1.9T stimulus package after the market closed. Plan includes topping off covid relief checks with a $1400 kicker. Also included were extensions to the expanded unemployment benefits and extended moratoriums on evictions / foreclosures. $300B ear-marked for state and local governments.

Big banks begin reporting today. Feels weird for them to start on a Friday.

Pay Attention Today

  • January option expiry is today.  Make sure you address any positions you may have that expire today.
  • Markets are closed Monday for MLK Day.  Market Wizard Peter Brandt says Friday closes ahead of a 3 day weekend are very important.  How the Indexes and even key stocks close into a long weekend speaks to risk appetite and / or lack thereof.  Do the market bulls still have conviction or are they wavering?  The only fly in the ointment is options expiration which can distort normal flows and decision-making.  The proximity of “call walls” and “put walls” often mean averaged get pinned close to home and are not necessarily free to seek their natural level. THere are big incentives to ensure that locations with large opn interest in either Calls or Puts dont get hit so the most people lose.  Let’s watch in the afternoon.  If you do some investigation you’ll find the week following options expiry are often market inflection points.  Let’s see how they close it today.

Stock Picker’s Market

Since the new year it seems like the market correlations are breaking down. Leadership has changed and there is a wide dispersion between winners and losers.  You’re not going to be able to simply pile into tech or some other market segment and be fine.  I am seeing more dispersion not only between industry groups but also within them.  Because of the dispersion and migration into cyclical and value names that have low market caps, the indexes are likely either stagnant or go down while stocks beneath  the surface enjoy robust bull runs. The environment sets up for good stock pickers to get paid phat, while passive investors settle for mediocre results.  I am looking forward to it….both for the challenge but also the reward.  I think this market is going to be primed for a long / short book meaning having both long and short positions actually working at the same time. And I can tell you there is no better feeling as a trader than when both work at the same time.  Buckle up traders…..things are going to move faster from here!

Order Flow Insights

  • Yesterday there were bearish net order flows across all the indexes SPY / QQQ / IWM.
  • Flow Algo BUYS:  My option screener flagged  BA / QCOM / AAL / MNRA for  “BUYS” based on their algorithm that snifs out unusually robust call-buying activity.  I view these flagged names as a starting point. If the chart looks productive AND there is institution order flow piling then chances increase that a long position will work.  If the chart is junk, then I usually pass.

Bull Flow Summary

Bearish Flow Summary

Trades about to Happen

$DM – DeskTop Metal

Desktop Metal is an emerging 3D printing company. They have been around for a while but their products and technology are just now coming to market. They have developed some proprietary 3D printing processes that the company claims is up to 100x faster than existing solutions for certain applications.  Recently Cathie Wood of ARK Investments, the newest rock star on Wall Street, gave the sector a boost when she plugged the sector on a recent video.  I think she also had new buys in the space.  $DDD / $SSYS are in this space.   At about 3.30pm yesterday, I opened a position with Feb 22.50 calls.

FATMAAN Names

In the companion video, I cover off the FATMAAN names using the daily timeframe. Some very interesting trade locations are on the horizon that will set up well for swing traders on the daily time frame.

INDEX CHARTS

A detailed walk-through of the levels and trading strategy for the indexes is given in the video ( link above) . The static charts are provided for reference. The FATMAAN names are also reviewed in the video

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hr

IWM 30 min

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