Daily Profit Compass July 23

Tickers discussed: SPY QQQ IWM  DDS BBY NFLX Active trades and set up review  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

When we lurch and grab at things we set ourselves up for disappointment. Ditto for great expectations. Simply be present and attentive everyday and let things unfold organically. You’ll feel much more fulfilled as the anxiety about the things you used to have your heart set on subsides. This same posture that works in our everyday lives works fantastically in trading. If you’re not living and dying with every tick, you have the ability to step off the emotional roller-coaster and can face markets with dignity, poise, fortitude and most importantly, with a calm, stable emotional posture. Amazing things will happen in your trading if you can maintain an emotional rock of stability.

Earnings

Marquis names  TWTR, T, INTC headline today’s earnings.  Earnings onslaught underway.  

News Flow

  • McConnell in focus as he tries to thread the needle on Phase 4 Covid fiscal package
  • Covid rolls on as Tokyo, Hong Kong, and US Cases surge.
  • Public support for full re-opening of schools begins to wane
  • Airlines flying empty planes to nowhere to keep pilots certified.
  • LUV, DHR, TSCO all beat earnings expectations. DOW beats on revs; 1c miss on EPS
  • Euro surging and USD falling continues to provide rocket fuel for Gold which is rising for the 5th straight day

Covid Benefit Fiscal Cliff 

Previously posted but I want to leave up for a couple weeks for new subscribers and as a monitor of deadlines as they approach.

BASE CASE :  Politicians will find a way to get a Phase 4 Covid relief Bill signed before the August recess in the ballpark of $1.5T because it is in the best interest of both parties to do so.

BEST CASE:  $3T bazooka

WORST CASE: No deal which would likely send the economy and the markets into a tail spin heading into the election.

Expect politicians to play hardball in the media. This may roil markets. Inclined to buy the dip unless big red lines are crossed on the charts. A deal, any deal, will be market positive.

Covid Relief Runoff timeline

 

Green Light – Post MSFT and TSLA Earnings

Although we can’t rely on AH / premarket  trading in MSFT and TSLA as secure, as it stands, both names did what they had to do to avoid a giant red bar which could have soured sentiment in tech. Once the institutional money has had a chance to weigh in today, and if things remain as they are, all systems remain a go for launch. We still have to get through the rest of FAAMG but one step at a time.

Futures are green this morning. That always leaves open the possibility for a flash sell off to fill the opening gap below. For me that would be a gift to enter a long position after the gap fill is complete. As always, set a stop just below. Otherwise I dont see any tangible sell signals to act upon. Green Light for higher until new facts say otherwise

Focus on these Index levels.   SPY $327: Above $327 I expect SPY to close the gap to $329. There I expect a reaction / hesitation, but if price breaks above $329 I’d expect a run at the old highs. Downside support levels are highlighted on the charts.    QQQ $265:  We are at $266 premarket. Anything above $265 is bullish. Above $267 opens door to $270.   IWM  $147.50.  Price is at $149 in the premarket which is resistance.  Anything above $147.50 is bullish; a break above $149 is a buy with an eye on $150. There is the gap from March above at $151-152.50 that remains open. A break above $150 is a buy with eye on the gap.

Note:  We have a new initial jobless claims print this morning at 8.30.  Potentially market moving.  Stay fluid and flexible if they pull the rug pre-market. Key downside support levels are on the charts

 Strategy & Tactics – Continue to lean bullish

Benefit of doubt remains with Bulls. 

  • Lots of warning flags but no sell signals keep me cautiously optimistic and wanting to participate on the upside.  THe lines in the sand are clear.
    • On your positions set reasonable stops and honor them. That is all any trader can do. Roll & Protect on Winners.
  • Watch the FAAMGs.  They alone have the market cap to lift the market by themselves and if they run into earnings we could be set for a blow off top
    • Remember Soros the “bubble hunter”…..”When I see a bubble I buy it”
    • QQQ – looking for the prior high now at $270.  $265 should be support.
    • Bears have had so many chances and have done nothing. Make bears prove they can take, then maintain, control.
  • Staying bullish does not mean complacent
    • Stay vigilant! 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.
    • You know they can pull the rug at any time for no reason at all.
  • SPY broke above the wall at $323……Massive OH gap to fill on SPY to 329. Anything above $323 is bullish. 
  • VIX getting crushed; sub $25 for first time in a while
  • 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 July 23

Click on the Links to view my annotated live charts

FB                  Daily

AAPL            Daily

AMZN          Daily

MSFT           Daily 

GOOGL       Daily 

Charts in Focus

$BBY Bracket set up

$NFLX – Still trapped in it’s bracket

If QQQ surges, getting long NFLX against the bottom of the bracket at $484 may prove to be a nice entry. The gap is open to $530.  $40-45 above. I like that trade. $6 of risk for potential of $40 in returns.

$DDS – Dillard’s might be the ultimate flyer

Let’s be clear. I hate retail. That said I am long XRT on the breakout. Price = Truth.  Was looking at $DDS.  Big double bottom with massive bullish divergence on the PPO. This is usually a money setup to the long side. Look at the risk reward. 50cents of downside risk vs almost unlimited upside. I like that bet long against $22.50.  You can also see an potential H&S formation as well. If that scenario plays out and price makes a break below $22.50, you can flip bearish and short it to $10 or lower.   Saw a few buyers of Feb 2021   $30 calls for $3.   No micro management. Just set your stop a little below $22.50, let it go and see what happens. Option chain isnt that robust, so be patient and try to get a good fill if you decide to put something on.

Active Trade set ups / Positions

$JMIA – They dropped a secondary on us that pulled the rug out AH. We’ll have to see the market reaction today to know where this one shakes out.

$GWPH – Soggy; needs to hold $130

$NEE – We are out. Look for re-entry after earnings on Friday.

$COST: Bull flagging above the breakout level. Looking for higher

$YETI – 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 – We are $10 to the good on out $85 entry and just shy of the technical target at $95. Roll higher and protect / raise stops.  Earnings date not posted yet.

$FDX – long against either 155 or 162. Holding its breakout. Room to move higher. Respect stops depending on entry.

$GDX –  Moving higher with gold which has been up 5 days in a row and moving toward the 2011 high of $1911. The $USD continuing to fall along with real yields falling is rocket fuel for gold.  Buy the dips or stay long ; Traders can also look at Gold and Silver miners for individual names.  PAAS, WPM, KL, NEM, GOLD etc

$NFLX – Bracket trade set up above. Leaning long against the bottom of the bracket with QQQ strong

$CHGG – Still below $77; Alarm  $77 for a break to new highs and BUY it

$CHEF – $12 alarmed for a downside break

$ICE – Beginning to move. If you like it take it now against 94.  Could have room to run.

$OLLI – 10% moonshot yesterday. Trading 108. Can be long against $105. $3 of risk vs. Blue sky after consolidation. Going higher

$BBY – Bracket trade set up above

$SYNA – We are out on 9% pop. Earnings Aug 5  Bracket trade set up but I’d be out before earnings

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

$WKHS – Set an alarm at $13 support.

$IBM  They faded the earnings pop. Great trade if you followed price and traded it.

$XRT – Retail ETF is breaking out. Long against $45.50

Index Chart Review

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30min

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