Daily Profit Compass June 22

Tickers discussed: SPY QQQ IWM FAAMG   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 –  Self-Talk Followup

In the Weekend Profit Navigator we began a discussion on Self-Talk. If you missed it, you can find it HERE 

As we started discussing, your self-talk is an important first step in re-programming your brain from anticipating negative outcomes to positive ones.  The sequence of events that follows goes like this.

  1. Programming creates a belief system
  2. Beliefs creates attitudes
  3. Attitudes create feelings
  4. Feelings determine actions
  5. Actions create results.

Once you you go through the cycle it feeds on itself. Positive results begets stronger beliefs and then a virtuous cycle is created.

Earnings

Sector Snap Shot

News Flow

  • Futures shrug off bearish weekend news flow; up 1%
  • NYC enters Phase 2 re-opening; You can now get a haircut
  • WireCard brings back reminiscences of Enron; company states missing $2.1B likely does not exist
  • $AAL floats $3.5B in equities and notes to bolster balance sheet
  • YTD Corporate bond issuance blows past 2019 total as companies load up on debt
  • Liquor maker Moutai passes banking giant ICBC as China’s largest listed stock
  • Brazil’s covid deaths top 50K; Germany sees Covid cases re-emerge
  • US Home Mortgage delinquencies top 2011 levels.
  • Former NY Fed Gov. Bill Dudley sees Fed balance sheet at $10T

Market Snapshots

EuroStoxx 50 hits the apex

How this triangle resolves will be important. Breakout or breakdown?  Stay Tuned

US Treasury Yields test support

A break of support at 0.60% would likely send rates tumbling. Worth an alarm if you don’t watch it closely.

Covid death rate falls

Some say the Algos key off this, not case count.

Covid denial

It took 10 years to recapture the job losses from GFC1 which were 1/2 as many as we have now. Structural shifts to online retail and automated manufacturing may make job recoveries tougher this time.

Risk ON won’t die

They say this is the most hated rally EVER. I have no way to know, but do know that markets continue to march higher in the face of what you’d think was bearish news flow.  For now the markets  continue to be dismissive of the COVID threat even as the virus continues to spread posting record-high numbers in the South and West. The underlying assumption is that despite the rise in infections the death rates continue to remain subdued as better treatment protocols as well more fit cohorts get the disease. Time will tell, but while death rates have declined, the sheer increase in new cases almost assures that the numbers will inch back up, especially if the disease turns wildly exponential once again.

Time will tell if these regional hot spots will force politician’s hands to re-implement limited lock downs or impact the economic numbers. For now, the risk-on flows remain in place but with SPX 3100 and Nasdaq 10K as solid resistance zones where bull advances have stalled.

 Strategy and Tactics – no changes

  • 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.
  • Expect daily vol to continue with headline whipsaws and with VIX elevated at 35.
  • 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
  • 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 while we are in chop zone.
  • FAAMG – Firm but upside momentum fading with bearish divergences on the 60m timeframes.  FAAMG needs to power through this to open door for general market upside. .
  • 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

  • FB –  A move above $240 will take out the ATH; ATH’s are bullish.  If you get the break out, get long w/ tight stop. Those long from lower levels can raise stops / strikes to preserve embedded gains.
  • AAPL – Needs to hold $342.50 to hold 60m up trend line or further downside is favored.
  • AMZN –  Stay long against $2660.
  • MSFT  – Pushing toward ATH’s; no chinks in the armor so far.
  • GOOGL – Soggy since 60m double top at $1465;  $1410 is a BTD location; a break below targets $1385

Index Chart Review

We saw a monster fade on Friday counter-balanced with pre-market futures flashing green. It will be interesting this week to see if the June OPEX roll-off generates a pivot point in the market.

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30min

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