Daily Profit Compass July 17

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Tickers discussed: SPY QQQ IWM  NFLX RNG   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

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Earnings

Netflix earnings after the bell

News Flow

  • Today is July OPEX. Be sure to close out or roll any options expiring today to avoid unwanted surprises.
  • $NFLX AH dump last night AH maybe a sentiment shifter in Tech. Lots of stretched names. Will be interesting to see if traders shoot and ask questions later or hang in there.
  • Corona cases continue to spike.  Arkansas and Colorado implement mask orders; Texas shut down rumors swirl
  • WMT and KR wrestle with coin shortage; funnel customers to electronic payments

 

Market Snapshots 

 

 

Netflix fall out?

So AH last night they pulled the rug on NFLX after sub growth disappointed. The drop was so bad, Netflix was trading at levels not seen since June 30. LOL.  The stock has been on an incredible run and last night looks like a pin prick on a daily chart, and it is. Not long ago it was $250, then battled the prior high at $385 for a while. Once it broke out, it was gone.  Watch carefully if this prompts a sentiment shift, especially in software high flyers where multiples are sky high. It will be interesting if the dipsters rush in on Netflix or if the result looks and feels more risk off and if traders sell out of high-flyers pre-emptively heading into earnings.

OPEX.

Today is July OPEX.  In recent months OPEX has not produced any fireworks, but one always must be prepared.  Make sure you address any options you may have to avoid unwanted assignment.

GOLD / Gold Miners.

I exited my gold miner position for a small loss. Overall the long miner trade was profitable as this latest position was a roll up from lower strikes. THe price action has been horrible. THe breakout above 1800 should have seen a massive momentum surge. That did not happen.  Stay on your toes. Gold may actually become a short in the coming days.

 Strategy and Tactics

Benefit of doubt remains with Bulls. 

  • Warning flags for bulls are all over the place, but that’s been true for weeks if not months.
  • Make bears prove they can take, then maintain, control.
  • Ratchet stops / Strikes higher on your winners and keep exposure at manageable levels.
    • Mark clear levels on your holdings for exits; honor those levels on a pull back.
  • Massive OH gap to fill on SPY to 329.
  • QQQ seeing relative weakness, May pause or pull back here. Watch FAAMGS for clues.
  • Eye’s wide open though trying to keep open and flexible to new data and inputs.
  • Expecting a hi-vol summer with Covid and political headlines whipsawing markets
  • I realize its difficult, but don’t lock it on an idea or thesis. Stay open and flexible in your thinking. Let price be our guide. Stay mentally flexible here.

FAAMG Live Annotated Charts

Annotations updated  Today July 17

NOTE:   Microsoft triggered a sell signal on the break of it’s up trend line. 

Click on the Links to view my annotated live charts

FB                  Daily

AAPL            Daily

AMZN          Daily

MSFT           Daily 

GOOGL       Daily 

Charts in Focus

Netflix – Time to unsubscribe?

After a rough earnings reaction, price has taken back about 1/2 of the AH loss. and is set to open around $490. Marked below is the 1 hour chart with the support and resistance zones marked. If the stock rallies, I think it will run into trouble in  and around 505 but flashing a gap fill to $530 is always possible. If price loses $470, I’d be looking for $440 and expecting a bounce there. If price made it to $410, I think you’d find a ton of dipsters waiting.   When there is a big earnings gap down, it usually favors further downside.  A great way to trade this, is set up a second day bracket trade. Alarm today’s high and low, then going forward, follow price higher or lower from the range.

$RNG – Ring Central at a key spot

Ring Central has spent the past couple months trading in a wide $40 range.  Currently price is sitting at a key spot at $250. THis is the bottom of the range and coincides with the prior breakout high. TA 101 dictates that support is support until and unless broken.  If you are constructive on the market, this is a beautiful long entry.  Price is at key support with a tight stop available just below $250.  If it holds, price should move back to $290 and a breakout above $290 points to $330.  A fantastic risk / reward set up.  If price fails to hold $250, I favor a quick move to test the 200ema at $220, then $180 ish if the 200ema fails.  Odds favor a hold here but at the end of the day, this will trade with tech. If tech falls apart, you’ll get stopped out. If that happens I’d immediately flip short.  If you are bearish on the market / tech, wait for a break below $250 and get short.

Index Chart Review

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30min

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