Daily Profit Compass Jul 31

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Tickers discussed: SPY QQQ IWM  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 – Will Return


XOM, ABBV, CAT, CVX, UA, PINS wrap up blockbuster week of earnings releases. 

News Flow

  • $600 Weekly Covid bonus expires today as Congress heads into the weekend with no Covid relief package in sight.
  • Bond Yields crater to record lowers
  • Analysts rush to upgrade FAAMG and lift estimates.
  • XOM posts its biggest loss EVER


Big Tech concentration risk is running off the chart; takes out dotcom high

Expect analysts to fall all over themselves to bump price targets on tech

$NQ Futs Triple tap the highs

Big Cap Tech Blow Out

Big Cap tech ripped the cover off the ball last night with some simply astounding numbers as consumers, starved by the covid pandemic, flocked to buy phones, tablets, services, products, and nearly everything else under the sun. The price action after the bell was of the moonshot variety wilth FB, AAPL, and AMZN raced to near prior all time highs. GOOGL was a little soggy but nothing too worrisome. As traders though, it’s the price action we are most concerned about.

FB, AAPL, and AMZN should open with massive gaps below. Each of the stocks need to preferably take out their prior ATH and hold it to be in a position for further gains down the road. If however the collective community of longs decide to book profits, we could see price backslide into the open gaps.  Traders should be on the lookout for that.

Potential Trading Strategy:  The weekly options that expire today will get a lot cheaper with IV draining after the earnings event. If you see / sense a backfill of the gap beginning, you can pick up some cheap weekly put options and hope the selling builds / persists to the close.  I expect that anyone who bought long options into these earnings will be closing them out.  THis is more or less a lotto strategy because anything you buy that expires today will decay quickly.  BUT if any selling really picks up, you can pile up a nice win.   Only play with money you are happy losing.

The Indexes

SPY / QQQ traded near the recent highs in the AH but have since dribbled lower.  Price really needs to pop above the overnight high and hold it to open a path to higher ground. Otherwise the same comments hold here as above. Price is subject to a gap back fill.   The price action in the next couple of days will be very telling. Did last night mark peak bull sentiment and FOMO or mark the beginning of a run to new highs and a big leg higher.   Gotta wait and see. Let’s let price lead the way instead of guessing.

Strategy & Tactics 

Bulls in control until Bears prove otherwise. 

  • FAAMG – Watch closely for bullish or bearish price action following earnings.
    • THe next couple of days are critical for bulls to consolidate the gains and not let price backslide to fill the open gaps.
  • Massive GDP contraction and bump in initial jobless claims met with a collective sigh by markets. No effect. 
  • 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  Friday July 31

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 –  Roll higher into a call spread  ( Aug 12 / 16 Call spread or similar ) to book gains and stay long. . 

$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 – Booked win at 173.50 and creating a bracket trade going forward. 

$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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