Daily Profit Compass June 25

Tickers discussed: SPY QQQ IWM Gold Oil ATVI  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  – Will return

 

Earnings

Sector Snap Shot

No place to hide; especially in cyclical sectors.

News Flow

  • Futures pare 1% overnight sell off but still slightly red
  • Covid rages as policy makers implement mask requirements and select quarantines.
  • Bank stress test reveal today but with no specific names.  How come Jay?  What are you hiding?
  • $DIS indefinitely delays Disneyland re-opening.
  • AAPL closes more stores in Covid hotspot areas
  • Wirecard files for insolvency. Add it to the ENRON, Worldcom, and Madoff  fraud lists where it all happened in broad daylight helped by ineptitude / complicitness of regulators.  Expect more revelations if recession deepens.  Boom times are fraudsters best friend; Recessions are hated enemies
  • $100B in PPP loans go unclaimed

Risk – Off Rooster Returns

At least recently, when the risk-off rooster returns, he gets roasted and eaten for dinner. Will it be different this time or just another dip to buy in a series of dips to buy?  My outlook is for lower prizes but not a time to go gonzo short. On SPY we have the 200ema coming in at $294, which coincidentally,  is the measured move target from bear flag move from yesterday. And FYI the 50ema is 298.50. So the bears have work to do. If / when we lose the 200ema would be a time to lean in a little harder on the bear side.  Until then we gotta respect these bulls who just won’t quit. If a 5% sell off 2 weeks ago did not scare anybody, hard to think a 2.5% sell off would.

 Strategy and Tactics – 

  • Bears emerging but lots of work to do.
  • We flopped on FB, but SEAS / SIX / RCL / SBUX / USO / XOP / KRE  emerging as nice winners as money flees the great re-open cyclical names.
  • 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 –  The market wont truly crack until these do. Period 
  • 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 –

I will do a chart update on a separate post today

Sector Review

Ditto – look for a sector update today. For the meantime, here are some breakdown levels for the key sectors.

$XLK – $101.80 ( AAPL / MSFT 40% of index )   $XLV – 96.75   $XLF – $23.06    $XLY – $123.  Amazon = 25% of index   $XLC – $54.25  ( FB / GOOGL 40% of index )

Key off these levels.  Charts to come.

Charts in Focus

/GC – Gold Futures Hourly 

Price put in a divergent high and dropped below a rising wedge. Prefer price to hold in but technically could fall further. A move back above $1780 will get it back on track and above $1790 would be a break out.   I am long GDX Jul 34 Calls and am slightly positive on the position. Monitoring closely.

$USO 60 min – Oil

Chart has been posted a couple of times in recent days. An absolute gravy train for those who got short and a few in the trading room did. . Down 7% yesterday at one point. Now price is sitting on a ledge of support near $27. A break below targets the levels shown. For reference, here are my levels off /CL futures.   37.62 / 36.87 / $36.20 / $35.     THese wont correspond exactly w/ USO but will be close. I expect price to find T3 over time but w/ baby bounces along the way.  If you don’t want to trade oil directly, $XOP is a good proxy

 

$ATVI – Activision

We’re long July 75 calls and down a little since we entered, yet price still holding its 8ema and key lateral support. Hard to get too bearish at this point but with options if price isnt moving your direction time decay will begin to hurt. Watching closely.

Index Chart Review

Will the bulls step in here or do we have further to slide?  The downside triggers are pretty close for a continuation lower so bulls don’t have a ton of wiggle room today.

SPY 2 hour

SPY 30 min

QQQ 2 hour

QQQ 30 min

IWM 2 hour

IWM 30min

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