Daily Profit Compass June 24

Tickers discussed: SPY QQQ IWM FSLY  USO  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 

Fear of the Unknown

Think about it. How long does it take to flip from bullish to neutral to bearish?  Of course the time frame you’re trading makes a difference but in general it only takes 5 minutes, maybe less, to change your posture in the market.  A support line fails, a trend line breaks, price falls below an ema, an ema pair crosses.  If you remember stick shift cars, You push in the clutch and go to neutral before shifting gears. Same is true with stock positioning. Bullish goes to neutral then either back to bullish or bearish.  If you trust your process, you should not need to worry about a correction as long as you trust and react to the signals the process gives you. If you don’t trust your process or randomly take / ignore it’s signals, that’s a whole other discussion.

 

Earnings

Sector Snap Shot

News Flow

  • New trade fears emerge as US considers fresh tariffs on EuroZone products
  • EU may ban US travelers when external borders open; German Covid cases rise.
  • Impossible Foods CEO says Meat Industry will be obsolete in 15 years as Plant-based protein supplants Animal-based ones.
  • Southern state Covid cases rage on.  $CCL Bond rating gets whacked 3 levels to Junk.
  • BUY Signal for Robinhood Traders?  $GNC files for bankruptcy

Fresh Jitters

New Euro Trade Fears add to Covid worries

The overnight session was weak as the Trump administration begins to make noise about instituting fresh tariffs on certain Eurozone products. May be a tit-for-tat move as the EU considers ban on US travelers and the ongoing spat about a digital tax.  Hard to know what’s real, but futures taking a leg down is as real as it gets these days. The backdrop of increasing covid cases continues to cast a pall across markets but negative effects have been limited.

The indexes are finding support at well-defined levels we’ve had on the board for weeks. ( SPY $308 / QQQ $247 / IWM $140 )   It will be important for price to hold these pre-market support levels in the regular session. Breaks below that stick would likely open the door to bring in more profit-taking sellers and a drop to the next well-defined level.  Yesterday price yet again pressed $314 on SPY and yet again failed for the third time to break through.  As far as I am concerned SPY $314 has emerged as a green light level for price.  Now we’re in the yellow light area of high-chop and directionless ping pong.  Below $300 the yellow light turns to red.   Just general levels but the ranges are well-defined.

 Strategy and Tactics – 

  • Tough for swing traders to get traction in this chop. 2 steps forward, one back or sometimes 2 back.
  • 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 – Re-emerging.  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.

Charts in Focus

$FSLY – Fastly 

The company has doubled in 5-6 weeks with a parabolic advance. If you’re long congrats but be wary of the gravestone doji candle that printed yesterday that marks buyer exhaustion. A red candle today would support the idea of an emerging trend reversal

$USO 60 min – Oil

Price has broken its 60m rising wedge and now has an open path for lower prices. I see a thin layer of support at $27.75 – $28.  On a break below T1=$27, below $27 >> T2 = $25.40 . If you don’t want to trade oil directly, $XOP is a good proxy

 

Index Chart Review

Despite an overnight dip, risk on flows continue.

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30min

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