Daily Profit Compass Jul 30

Tickers discussed: SPY QQQ IWM  GLD TLT  DXY FB, AAPL, AMZN, MSFT, GOOGL FAAMG Update   Strategy & Tactics

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

The Journey is all there is

One of collective conclusions within our mentorship groups is that if you learn to live more simply, it takes a lot of psychological pressure off your trading. In the Market Wizards book stories are told about wildly successful traders driving around in rust buckets, not Ferrari’s.  Why?  1. Low overhead takes the pressure off.  2. Most experienced traders have had near death trading experiences and have seen friend wiped out.  Whenever you see a “successful trader” showboating with material things to demonstrate their success, you can almost be 100% assured that it is fake. Successful traders most often accept the success with humility and grace. They know, and have seen, how fleeting that success can be.

Companion Video

A 15 minute detailed look at the indexes covering the  30 min time frame on SPY, QQQ, IWM; Trade management on $FDX; A set up on OLLI.

Earnings

Massive week for earnings headlined by FB / AAPL / AMZN / GOOGL at the back end of the week.  Other noteables: SHOP / MCD / TDOC / UPS / XOM / CVX

News Flow

  • German GDP drops 10% but will likely look minuscule compared to US figures reported later today. Consensus is for a 35% contraction
  • Traders, investors, and politicians brace for new jobless claims print at 8.30am.
  • FOMC signals low rates forever lifts markets ( But the first move is always fake )
  • Clueless, grandstanding politicians  mostly fail to make tech CEO’s sweat.
  • Brazil reports 70K new covid cases in worst day EVER.  Australia surging case load during winter down under does not bode well for US outlook
  • $5T in market cap with AMZN, AAPL, FB, and GOOGL report after the bell.
  • Phase 4 Covid relief bill stuck in the mud as politicians with different objectives and beliefs wrangle

 

Gold extended with divergent highs

Gold has become a consensus long and the $USD a consensus short and the boat is loaded in both directions. A break below the rising wedge on $GLD opens the possibility of a quick pull back. The “swiss cheese” chart with a ton of open gaps has weak technical structure.  Any move higher in the $USD to squeeze out the shorts will be rocket fuel to a downside move in gold.  This is a tactical set up. Gold is in a structural bull market. Time frame is everything.   If you are sitting long in GLD / GDX / individual miners. Make make sure your plan includes getting paid.  Maybe want to sell some upside calls while gold vol is high.   Watch the wedge.

DXY / Gold Jaws open

$TLT Near Moonshot mode.

10 yr yields are making a move to test the lows driving bond prices to push toward a breakout. Taking out this high could spark a runner to the upside.

Say Whaaaaaaat?

Yields lower, financials higher and that ain’t right.  Somebody is wrong. Watch XLF for a TL break.

 

 

FOMC Fake move?

THe FOMC move from yesterday, at least for now looks fake with much of yesterday’s gains wiped out. THat said, tons of macro catalysts can take market right up to yesterday’s close with a simple gap fill. The key levels and game plan remain exactly the same as yesterday with price almost exactly at tuesday night’s close. Stay fluid and flexible in thinking and positioning. Those that followed the game plan and the levels yesterday did really well. Follow it again today.

Watch your over night risk. Big cap tech earnings have fire power to wipe out positions. My advice is to step aside and pick up the ball after the dust settles and the insitutions have had a chance to weigh in.  Discretion is often the better part of valor.

Strategy & Tactics 

Cautious ahead of Big Cap Tech earnings

Benefit of doubt remains with Bulls. 

  • FOMC –  Was the first move fake?  The Fut’s make it look that way. 
  • GDP print and initial jobless claims can move the needle
  • Will holders of big cap tech get cold feet or hang tough into the print?
  • Watch the FAAMGs. 
      • Earnings on Thursday looms.  AAPL / GOOGL / AMZN / FB all report after the bell.
      • Bears still have to prove it. Bears have had so many chances and have done nothing. Make bears prove they can take, then maintain, control.
      • Be cautious on overnight exposure on Thursday. 
  • Risk off Assets flashing a bright yellow light. 
    • GOLD / BONDs and / USDJPY currency pair are flashing a problem.  Eyes wide open.  No impact yesterday.
    • Gold a crowded long; $USD a crowded short.  A toxic sentiment mix primed for a reversal.
  • Staying bullish does not mean complacent
    • Stay vigilant! Ratchet stops / Strikes higher on your winners and keep exposure at manageable levels.
    • Dont be afraid to go short if you get a price signal; especially if you’re holding a bunch of longs. You’ll like that balance on red days. 
    • Mark clear levels on your holdings for exits; honor those levels on a pull back.
    • You know they can pull the rug at any time for no reason at all.
  • Stay Fluid and flexible in both positions and thinking; Dont lock in on Narratives.
  • Expecting a hi-vol summer with Covid and political headlines whipsawing markets

FAAMG Live Annotated Charts

Annotations updated  THursday  Jul 29.

Click on the Links to view my annotated live charts

FB                  Daily

AAPL            Daily

AMZN          Daily

MSFT           Daily 

GOOGL       Daily 

Active Trade set ups / Positions

Bold Text signals meaningful technical changes and / or potential change in an active position. 

$AMD –  Big pop on earnings beat; if you are long, at a bare minimum raise stops and strikes.  

JMIA –  Sold Aug 12 calls against my Aug 9 C position; will be out before Aug 12 earnings. 

$NEE – Holding $280 after earnings; watching for re-entry as earnings have now cleared.

$DLTR –  New Name. Alarm $100 for a potential gap fill $12 higher.

$COST: Emerging above its bull flag after breaking out.  Looking for higher

$YETI –  Holding above the breakout. Bought the Aug 45 Calls, looking for a pre-earnings run. up 2.5% yesterday and moving higher. Closing position ahead of earnings on Aug 6 no matter what.

$PZZA –  Make sure you get paid on this. Price has stalled and has met our technical target. Roll higher and protect / raise stops / close.  Earnings date not posted yet.

$FDX – BIG Pop following positive UPS earnings warrants rolling and protecting. Trading $177 in the premarket.

$GDX –  PM complex near peak FOMO and parabolic charts are due for a pause. Keep rolling and protecting your positions.

$NFLX – Bracket trade busted as price returned to inside the bracket; the immediate set up was foiled. 

$CHEF – Testing key support at $12 but with earnings days away, letting that pass before stepping in. $12 alarmed for a downside break

$DDS –  new name off the radar flyer.  Like it long against 22.50; but short against $22.50 on a break below.  Decide how you want to play.  No position yet here.

$FIZZ –  Roll and protect if long; very defensive name but i’d make sure getting paid is part of your plan.

$OLLI –  Bracket trade set up. Alarm $110 for potential breakout to fresh ATH’s; $107ish is the low side of the box. 

$BBY – Bracket 99.50 and 95.30.  Price inside the box.  $5 gap below to fill. Alarm your levels

$SYNA – Still in bracket/ Earnings Aug 5  Bracket trade set up . alarm $81 and $77.   Time is short before ER. May have to wait until after earnings to enter

$WMT – continues to consolidate above the breakout level. stay long

$WKHS – Set an alarm at $13 support.

$XRT – Holding the breakout. Long against $45.50

$INTC – Price broke below the bracket. I have initiated a position in the Sept 47.50 Puts with a relatively tight stop at 49.50. Right or right out.  

Index Chart Review

SPY 30 min

QQQ 30 min

IWM 30min

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