Daily Profit Compass June 29

Tickers discussed: SPY QQQ IWM  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.

R.I.P Alex Kearns

The fact that a Robinhood Trader recently committed suicide after getting a notice that he was down $730,000 on his option position is probably old news to you by now. What is new is that we have a face and name to go along with the story. Recently, as I have tried to be more active in my posting, I finally opened a Facebook account and have been exploring different stock-related rooms. The posts I see from new traders are astonishingly shocking. I wish them all the best of luck and much success because we all start somewhere. I have tried to make several posts cautioning some of the unbridled dart-throwing, but have been mostly ignored. This story is as bad as it gets, so my hope is that whatever losses these new traders experience is manageable and that they can learn from the experience.

Find the Article HERE

Trader’s Couch  

Forget about trying to “master markets”.  Focus instead on mastering yourself, then on helping others do the same. If you do that, everything else will fall into line. All your hopes and dreams for yourself in the market and your life as a whole, will become possible with the vast majority realized. It’s timeless wisdom that all great spiritual traditions teach.

Earnings

Watch MU and $FDX carefully. Important stocks.

Sector Snap Shot

No where to hide as broad based selling rolled through markets.

News Flow

  • Texas becomes the epicenter of the US Covid crisis
  • US-China relations becoming nasty as Trump urges de-coupling  while corporate CEOs want more China
  • Facebook Ad boycott set to go global as the dam has broken and it is now fashionable to boycott the ads.
  • L’Oreal to remove words like “whitening” from cosmetics packaging as BLM fallout hits peak stupid;  I wonder when they go after P&G because of their racist  Crest “White strips”
  • CHK, once the darling of Wall Street and poster child for the US fracking shale boom, files for bankruptcy.
  • The FOMC balance sheet has declined for 2 weeks running. Not a coincidence stocks have struggled. I wonder when they come roaring back.
  • NOTE:   Holiday Shortened Trading Week. Markets closed Friday.  Be aware of non-standard weekly expirations that will be on Thurday.

Market Snapshots

An extraordinary statement by Fed Governor Brainard dissenting from FOMC consensus opinion and not afraid to publicly comment.  If Friday’s price action is any indication, there is crap going on under the hood of financials.

The FOMC has created its own bond index ( with the help of Blackrock ) Here is a list of it’s top holdings courtesy of ZeroHedge

Oscillator Watch Update

NYSE Oscillators

Top chart is daily readings; bottom chart is weekly summation of daily readings.  Near-term, you can see NYMO has moved marginally into oversold territory. Bigger picture, readings are at the high end of the range and beginning to come down. Bottom line.  Charts favor lower readings over time, but tough to go gonzo short with NYMO at negative 70.  A few green days will lift the NYMO and technically allow for another leg lower. Note, these charts speak to probabilities not absolutes. You can see the NYMO can and does go lower then negative 70.

 

NASDAQ Oscillators

Clearer picture here. Summation index is overcooked and beginning to come down. ( bottom panel )  Daily readings only at neg 45. Plenty of room to go lower if it wants to.

 

Market Review – Bears emerge

It only took a couple of days, but just when you thought nothing could stop the upward trend, bears re-emerge.  As Covid re-asserts itself, $FB on its heels, and financials getting punky, the market has more to consider. Still n the early days, but bears have a lower high working and in a lot of cases a lower low on individual and sector charts. Certainly reversible by bulls, but this is how downtrends start. On several charts I posted the fib retracement zones off the March low. I think most would be startled at how much lower we could fall and still keep the uptrend in tact. Time will tell.  Favoring a move lower to test the 200 ema on SPY at 294

 Strategy and Tactics – 

  • Bears emerging but lots of work to do.
  • Planning on feeding you some bear set ups to monitor so we are ready if they trigger.
  • Watch financials and FAAMG; See if FB troubles migrate toward other big cap tech 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.
  • 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 and Sectors –

I will review and update under separate cover.

Index Chart Review

$SPX Broadening Top

SPY Daily

SPY 2 hour

SPY 30 min

QQQ Daily

QQQ 2 hour

QQQ 30 min

IWM Daily

IWM 2 hour

IWM 30min

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