Daily Profit Compass June 18

Tickers discussed: SPY QQQ IWM FAAMG  SBUX KRE  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 –  Teamwork

Institutional traders have a huge advantage over retail. Part of the advantage comes from both formal and informal teams that coalesce around the trader. Recently we talked about institutional traders operating under the guidance and supervision of a floor manager and risk manager.  But what about internal mentors, seasoned traders, and trading buddies?  All these groups provide technical expertise, coaching and psychological support.  From what I can tell, most retail traders work alone, and that is a disadvantage. Do some self examination and search for ways to build yourself a trading team. And if you are wondering, I don’t think gunning for more Facebook friends is going to fit the bill.

Earnings

Sector Snap Shot

News Flow

  • Futures  drop overnight on virus fears but then stage a “V -shaped” recovery as China declares virus contained
  • Jobless claims this morning with expectation of 1.3M new claims; under 1M print may spark fresh bull optimism
  • $SPOT signs Kim Kardashian for podcast in proprietary content push
  • $HTZ scraps plan for $500B stock sale as the SEC pushes back
  • Moderna insiders continue to sell with stock’s continued rally
  • JD.com raises $4B in HK debut
  • Bolton’s disparaging book roils White House

What to watch this week

  • Jobless Claims this morning at 8.30 am
  • Friday – Quad witching / June OPEX.

Market Snapshots

MACD Sell signals pile up:  Sentiment Traders shows that the number of stocks on momentum based sell signals are piling up to record levels.  While a MACD sell signal often leads to a price decline, there are times where the momentum correction takes place over time rather than price.


Stalemate

The Bulls and Bears continue to grind each other to dust with intra-day battles that ultimately leave the averages unchanged.  Bulls relentlessly buy every micro-dip  but then 2 hours later every bull catalyst known to man is already baked in. So then the bears take it back to where things started but with no horsepower or motivation to take it lower. We are in a tough transition period. Momentum for a push higher is waning but bears have not been able to take it down. We have a big triple witching on Friday and a massive pension re-balancing at the end of the month. THese have the potential to be inflection points.  Trading light in this choppy environment.

 Strategy and Tactics  

  • Bullish bias longer term with liquidity flood but neutral to bearish short term with momentum drifting lower and with neither bulls nor bears gaining control.
  • There will still be daily vol to take advantage of, but I see bulls re-emerging after last Thursday’s rug pull.
  • Eye’s wide open though trying to keep open and flexible to new data and inputs.
  • But with indexes moving $5 +++ on a daily basis with zero overnight risk, you can make a fine living just on that.
  • Want to take care on establishing positions with duration. Certainly dont want to load up bullish or bearish positions. Like I said, feels like a dart throw.
  • FAAMG – Firm but upside momentum fading.
  • 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 Update & Trading Guidance

No changes to the notes below from Yesterday. That said, not liking the charts too much. Bearish divergences are flashing on the 60min charts with price near the highs as momentum wanes. I will post a chart update under a separate post. Hope fully will get it out before the bell.

  • FB –  A move above $240 will take out the ATH; ATH’s are bullish.  Prices above $221.71 keeps the daily chart bullish; below favors 50ema test at $210.50
  • AAPL – Still walking the 8ema higher; $325 coincides with prior ATH and 20ema. No worries for bulls above $325; price pushing ATH’s
  • AMZN –  RSI / PPO and turning up which is bullish; The 20ema at 2492 is a great reference level for longs.
  • MSFT  – Pushing toward ATH’s; no chinks in the armor so far.
  • GOOGL – Back above 1440.  1480 and complete gap fill still the target.

Charts in Focus

Yesterday I offered 4 long set ups. Today, 2 short ideas.

$KRE – Regional Bank ETF  60 min

Looks like bear flag action to me with price breaking below the flag yesterday. Indicators are supportive of a move lower. Although I am not qualified as a fundamental analysis, regional banks are much more exposed to the main street economy than the majors but have no trading or other income streams to reduce the pain.  Could be in for a tough second half as mom n pops struggle to profitably re-open.  THe measured move projects $34.

$SBUX – Starbucks Daily

Chart giving a failed breakout look followed by a classic fail – backtest – fail pattern as the kickback rally bounces into the teeth of overhead resistance. I like this short against $79 with the 200ema in between at $78.  An alternative entry would be to wait for a break of $74.  I prefer now though against the 200ema and significant OH resistance.

Index Chart Review

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30min

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