Tickers discussed: SPY QQQ IWM FB AAPL AMZN MSFT GOOGL FAAMG TLT BABA JD 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 – Mastery
I have asked those participating in the Mentorship Workshops to take a very close look at their motivations for getting into trading. If you examine the motivations of craftsmen and masters of any discipline, very few had money as a prime motivating factor. Seeking money does not drive a person to keep going when things get tough. You’ve got to love what you do. If you don’t love markets and trading, you may want to go back to first principles and see if this is really what and where you want to be spending your time.
Earnings
Sector Snap Shot
News Flow
- Lawmakers signal their intent to let the Added $600/wk covid unemployment benefit to roll off at the end of the month.
- PPP loan recipient data reveal interesting findings. Hedge Funds, Trump ties, Farms, Venture capital firms
- TikToc exits Hong Kong due to China security law
- Europe sees deeper pullback due to Covid
- Harvard plans to go 100% online for 2020-21 school year; Sorry, no discount. Still $60K plus.
- Bankruptcies were up 26% YoY in H1 2020
- 3 FOMC speakers today
Market Snapshots
Wealth Inequality 100 year look. IMO this is the graph that re-ignites Occupy Wall Street 2 except with AR-15’s and pitchforks. The point at which the majority of the population simultaneously loses hope in the American dream and believe the elite has stolen it from them. When you look at the graph it’s hard to argue with them. Before you laugh it off, history is littered with examples where the exact same thing happened. We can still save it, but it will take a lot of focus and effort. It’s difficult for the 1% to voluntarily do with less.
The “abandoned baby” candlestick pattern is pretty rare, but also pretty powerful reversal signal when you get it. A gap down tonight would abandoned the baby. The formation is akin to an island reversal except with a single candle stick instead of a cluster.
This is like the wealth inequality graph except for the SPX. All the wealth is at the top. Courtesy of Carter Braxton Worth
The chart says it all.
FOMO takes hold
Despite the soft futures, yesterday saw signs of FOMO emerging. I think I now know what frontiersman felt sitting on a horse looking a herd of 10,000 buffalo and not knowing which one to shoot. I think the answer is it doesnt matter a whole lot. Yesterday I had TSLA up on a 5 min chart. I watched a $35-40 dip, looked away for a few minutes, then it had taken out the high and finished up $160. Sigh. TSLA has added more market cap in 5 days than the market cap of the Big 3 auto makers combined. Congrats longs, but that’s insane. It will be interesting to see how quickly the dipsters jump in on this soft opening. I think we pick our spots to be long with eyes wide open and stops in place.
Strategy and Tactics – Lean Bullish
- A soft open today; will be watching for dipster activity. Prior dips have been gobbled up.
- A break back below SPY $314 would be pretty bearish. Bulls need to hold the line.
- Fun Fact. THe VIX was up 2% yesterday and the $VXN was up 5% with equities boldly green. . We saw that before preceding a dip.
- 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 July 6
Click on the Links to view my annotated live charts
FB Daily
AAPL Daily
AMZN Daily
MSFT Daily
GOOGL Daily
$TLT
A nice trading range has formed. Either trade it or alarm it for a breakdown or breakout.
$BABA
Featured this yesterday, but the gap up made it a hard buy. I think a back test of $230 should be bought.
$JD
You can now be long and shoot against $62
Index Chart Review
SPY 2 hour
SPY 30 min
QQQ 2 hour
QQQ 30 min
IWM 2 hour
IWM 30min
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