Daily Profit Compass July 9

Tickers discussed: SPY QQQ IWM  FB AAPL AMZN MSFT GOOGL  PZZA NTRA BABA IHI    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 

“Never take home a loss over the weekend”

When Peter Brandt was a young trader in the early 70’s, his mentor taught him to clean up the portfolio each and every Friday.  So any positions / trades showing a loss on a Friday afternoon, no matter if the trade is only 2 days old,  would be sold out and eliminated from the portfolio. The benefits are two fold. First, small losers are not allowed to become big losers. The best trades work right away. If for some reason the stock changes course the following week there is nothing preventing you from re-entering the trade.  The second benefit is psychological. Imagine never having to worry about anything red in your portfolio over the weekend. So every weekend you are either green or not in the market. That is a liberating thought. I never thought about the above before, but the more I think about it the more appealing it seems.  I think the idea warrants some consideration in your trading process.

Earnings

News Flow

  • Biden maps economic plan that delays Progressives’ biggest plans
  • Market faces another test as new jobless claims print at 8.30am
  • Musk says TSLA is very close to level 5  “fully Autonomous” driving.
  • Pressure builds on JNJ to halt global talc sales
  • MHK trades lower on accounting fraud allegations

Market Snapshots

Passive fund flows continue gains

As more and more investors choose passive funds, there is an automatic fund flow to the top stocks by design. These funds cant go with a diversified approach because they will miss benchmarks and face redemptions.  Thus the trends favor more concentration into the top stocks.

The FOMC rolls on as it plumbs uncharted territory.

Copper does a moon shot

 

The Bulls are wearing Bears down

Deja Vu all over again. The bulls are wearing bears down. The bears have not even been able to accomplish a simple gap fill.  When what is supposed to happen doesn’t, we need to take notice. I think even 2 way traders are shying away from taking short ideas even though the technicals may support them. They simply have not been working for the most part. For every baby success, there is a reversal because there has not been any downside follow through at all.  Yes, it will all end badly, but that isnt the point. The point is to trade the price action in front of us and that price action is bullish. That said, lets not get stupid about it. Keep ratcheting up stops and strikes while maintaining your portfolio exposure at a manageable level.  Don’t be the guy who went 100% long with 300% leverage on the top tick.  Keep that day of reckoning in the back of your mind.

 Strategy and Tactics – Back to bullish

  • When bears can’t fill a simple gap, they have a problem.
  • The market will eventually correct but bears have to be getting gun shy.
  • Stay long but keep risk within reason.
  • 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 9

Click on the Links to view my annotated live charts

FB                  Daily

AAPL            Daily

AMZN          Daily

MSFT           Daily

GOOGL       Daily 

$PZZA Delivering the cash

Our long idea is working nicely. The measured move for the breakout is $95. If price lifts above $90, I’d consider either rolling higher or spreading the position to rake in some profits while staying long.

$NTRA – Looks like a long

After breaking out, $NTRA has successfully put in a back test of the breakout and offers a nice long entry against $47.  If you prefer, you can alarm $50 and buy the breakout. Nice chart with objective entries available.

$IHI – Medical Devices ETF

A break above $275 to ATH’s is a buy.  Alarm it.  The basket diversifies your risk in the space.

$BABA – Bah-bah Booey

Because my Mom says I need to self-promote more, revisiting $BABA which was highlighted Monday morning in the pre-market with price below $225. Listen, I get my share of bad calls like anyone but here’s one that was nailed. China names remain hot. Hunt for long entry points that make sense.

Index Chart Review

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30min

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