Tickers discussed: SPY QQQ IWM $NYMO 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 – On Opinions
“Lose your opinion; not your money” Market Wizard Linda Raschke
As Ms. Raschke clearly states, bringing in either your own opinion or those of others into your trading plan is detrimental to your bank account. It’s something we’ve all done at a certain point. That is why I favor unplugging from financial media and social media as much as you can or at the least, be aware of the risks. The various opinions offered in those outlets are like weed seeds being blow across your mind. Many will never germinate, but others will. Instead of opinions use more objective metrics whether to be long, short or on the sidelines. Ask yourself these questions. Is price ( market or stock ) trending or chopping? Above or below the 200ema? Are the 8,21,50, 200ema’s bullishly stacked? Is the 8 ema above the 21 ema.? Where are support and resistance? Is this a hit n run trade or are you giving price months to reach your target? There are a ton of ways to break down a chart to determine what your posture should be. Once you’ve decided, you’ve implicitly formed your own opinion.
Earnings
Earnings season continues to wind down, but still some notable names report this week. COUP, SFIX, CHWY, PLCE, ADBE, LULU, PVH
News Flow
- $AZN ( mkt cap $140B ) approaches $GILD ( mkt cap $96B) about a tie up that would be the biggest in history in the space.
- HSBC warns of Chinese reprisals over Huawei
- UK Airlines rip Govt over oppressive re-opening guidelines.
- NYT Opinion Editor quits after furor regarding a protest -related Op-Ed piece.
- Germany stunned by Trump’s plan to pull out 9500 troops from the country
Sector Summary
Cyclicals are again sitting up top on the sector leader board
$NYMO Oscillator hits extremes
The market is a tough buy with the NYMO “rubber band” oscillator at 99. It is a big cautionary yellow flag. It can go higher from here short-term but it is not an oscillator that wanders at extremes for very long. Key longs on a short leash.
Stay the course.
Not a lot to add to yesterday’s weekend commentary. If you missed it, find it HERE . We’ve got lots to watch this week including:
- FOMC Meeting and Policy statement
- Massive bond auction with bonds prices on a ledge of support.
- Ditto Gold with price on a big price ledge.
I like being long with modest exposure and tight stops. Plenty of yellow flags present but FOMO animal spirits are beginning to ignite. I think you can participate in a prudent, risk-managed way.
Strategy and Tactics
- IWM – Stay bullish but be aware of the big gap below.
- VIX – I own Jun 30 calls. Using as a hedge for long book.
- QQQ – All time highs are bullish. Anything above $237 stay long. Below $237 be careful; false break out look
- NYMO is 99. Sure it can go higher, but the rubber band is stretched tight. Downside risk is real even though you probably cant see or feel it.
- Keep ratcheting up stops if you have nice runners. Have a plan to get paid.
- Continue to watch FAAMG. Even if you dont trade them, sheer cap size will move QQQ and markets in general.
- I still think Tactical shorts ok, but overall bias remains and should continue to be bullish.
- Stay mentally flexible even though your heart may urge you to go “all in”
FAAMG Update & Trading Guidance
- FB – No changes; Prices above $221.71 keeps the daily chart bullish. That said, momentum has flatline.
- AAPL – You can be long against the prior ATH at $325. Blue Sky overhead.
- AMZN – Bulls can be long against $2450. Measured move points to $26.25 after breaking out of a big $175 trading range. Price below $2450 would not be helpful. Want that to stay above. .
- MSFT – Broke above resistance on Friday. ATH above 190 in sight and targeted.
- GOOGL – Price has been testing 1440 gap entry from below for a week w/ no luck. Maybe this is the week it pops and runs to $1480.
Index Chart Review
SPY 2 hour
SPY 30 min.
QQQ 2 hour
QQQ 30 min
IWM 2 hour
IWM 30 min
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