Daily Profit Compass Jan 21

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

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 

Earning season kicks off in earnest this week.

Tuesday – Follow up on Big Banks with GS & BAC reporting with NFLX reporting after the bell which could and often is a sentiment gauge for mega cap tech.

Wednesday – PG should give a decent read on the consumer; FAST in the industrial space; UAL first airline to report; plus a slew of other regional financials

Thursday – INTC may provide color with new CEO in place; CSX first in rails and PPG industrials and yet more regional financials

Friday – SLB bell weather in oil services

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

 

Order flow Insights

$FSLY

The FlowAlgo algorithm flashed a buy. Note the activity is very short dated for tomorrow expiry.   Now i learn Oppenheimer upgraded FSLY with a $125 price target. Somebody always knows. THis was the likely catalyst for the call buying.

$NET

FlowAlgo flagged this one as well as a BUY.  Further out in time.  As always, review the chart for the technical triggers you look for in your process.  Order flow info should inform your trading decisions, not dictate them.

Index order flow

SPY order flow was neutral, while QQQ was bullish and IWM bearish.

Technical implications of the Netflix moonshot

After 6 months of consolidation, price made a power move to take out both the top end of the consolidation box and it’s all-time high. If price can hold the breakout through the Friday close it confirm the weekly move.  Notice also the posture of the RSI and PPO indicators. RSI broke above trend resistance and PPO is just beginning to execute a bull cross. That is the triple whammy green light BUY signal.  A beautiful spot to get long for the next leg higher against a very well-defined and substantial support level. A minimum measured move target is $675.  This is a very bullish set up.  The only thing that knocks the thesis and the trade off is a weekly close back below  $560.  Anything above keeps the chart bullish in my view.

Operation FOMO

To me, yesterday felt like the start of something bigger. There were outsized igniting candles all over the place…the kind of candles that jump off the charts. There was also very little corrective action on short time frames like the 5min chart. Normally you’ll see a ramp followed by a fib retracement, then re-ramp etc. It was pure buying from bell to bell. Another thing, is that when price hit overhead resistance in many cases there was no normal hesitation or reaction. Price just blew through those levels.  Keep in mind, these are all subjective observations and trader intuition. Nothing to trade on.

Remember last summer, when Dave Portnoy became our newest celebrity trader?  When everything went up for any reason but for mostly no reason?  That was right after the first round of stimulus checks.  Well everyone just got their $600 over the past couple of weeks. That money is finding its way into the market. Also we’ve been all but assured that another $1400 is coming our way. No one will every connect the dots for sure, but it’s a helluva coincidence.

Look at the graph of the small-lot call activity. The ramps in activity coincide with the stimulus. We’re currently 9x normal.

Get emotionally and psychologically ready for insanely stupid stuff to happen before your eyes. Price moves that defy all logic or reason. It could potentially be an environment that is very unsettling.  Putting money into trades that you know damn well are “fake moves” isn’t necessarily an easy thing to do.  But here is a subtle point. THe moves are NOT fake, they are very real and we will track them on our charts.  What IS fake, is that the price moves are not tied to any reality. The reasons are fake. IMO traders who will try to link the price moves to logical, sound, investment reasoning will either be dead, or will be sitting on the sidelines. Think about it.  I think we will know it when we see it.  I think we will be able to participate in whatever move is coming without being completely reckless. One thing for sure, I think there will be plenty of trading opportunities coming our way. I look forward to identifying them, and trading them with you.

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. NOTE:  Today, the 30 min charts are reviewed in the companion video

SPY Daily

SPY 2 hour

QQQ Daily

QQQ 2 hour

IWM Daily

IWM 2 hour

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