Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA TLT LYFT BA LC
The Daily Profit Compass provides stock market technical analysis for the stock market today and is focused on the indexes and FAAMGs. Key levels and trading locations are provided, along with trading plans and timely commentary to keep you on the right side of the trade.
Companion Video – Will Return Tomorrow.
March Quad Witching Preview
We have a big quarterly option expiry this Friday. These events are also linked to quarterly fund rebalancing which promises to be significant this time around. We also have an FOMC meeting on Wednesday which may influence 10 yr bond rates that have been roiling QQQ and bubble names. Below are the high points of what to think about this week.
- Quarterly Quad witching option expiration is Friday.
- Take action on any March options expiration positions you have early in the week. Roll positions you want to keep. Close the ones you dont. March positions will become more volatile as we proceed thru the week as expiration approaches.
- FOMC meeting Wednesday. Although no new info is expected its often what they dont say that moves markets / rates.
- Big 20 year bond auction this week, plus a bunch of TIPS Bond auctions
- I expect vol to come in with a creep higher on SPY / IWM as they grind to fresh highs.
- QQQ should remain a wild card linked to 10 year bond yields…..especially the bubble stocks. FATMAAN names may do relatively better as they at least have strong earnings support. That said, institutions may use FATMAAN as an ATM to move money out of tech to the cyclical sectors.
- Aside from tactical trades, i am steering clear of these names for strategic / duration trades.
- Fresh highs on Transports and $INDU confirms a Dow Theory BUY signal.
- Quarter end rebalancing – Institutional funds are like battleships. they cant shift on a dime. I think they are largely under weight the sectors that have been working. ( Commodities, cyclicals, value , financials, energy, re-opening names etc ) As rebalancing happens, I think you’ll see big inflows to these sectors and money come out of tech. I expect tech to continue to under perform / lag in Q2 as interest rates either remain elevated or take the next leg higher. Tech is on my AVOID list
- For these reasons, dont think “I missed the trade” on cyclicals / value.
- These sectors have been in the dog house for 10 years plus. Its likely that in the bigger picture, the move is just starting.
- THat said, dont blindly chase. Find entry points on pull backs or after consolidations / breakouts. $GM on Friday was a good example. Nice consolidation followed by a breakout runner. We had a very objective entry and good entry point.
- We will find more like this.
- The Week AFTER option expiration vol will again increase after rebalancing and all the March option pinning positions roll off. Week of March 22.
Order Flow Insights
There were 3 stocks that were flagged for bullish order flow.
- LYFT saw 3x call buying with the biggest order being a single buyer of 5725 Jul 65 Calls at $9.25 Ask
- LC saw 50c call buying. Apr 17 calls were popular along w/ THe October 15 / 17 call spread bot 900x. THe stock is trading at $15. The Apr 17 calls are a fairly low probability trade. If you like the set up I’d target the 15 calls. Earnings are after Apr expiry
- BA saw 5x call buying. Biggest trade was a trader rolling Mar 160 calls out to the APr 1 170calls. 5363x. Notice the “Roll n Protect” strategy being employed. Banking the win on March calls, rolling higher, buying another week and staying long. Pro move.
TLT – Driving the NASDAQ Action
TLT has broken below the flat bear flag. $136 is the last chance to save this IMO. A decisive move below $136 would likely usher in a wave of fresh selling. The measured move target for such a move would be in the high $120’s – $130 range. In this scenario, 10 year rates would be racing north of 1.65% – $1.70 and on it’s way toward 2%. A potential catalyst is the FOMC meeting on Wednesday.
FATMAAN Pivot Points off 60 min charts.
- FB – Use $268 as your pivot. Above ok; look for $272 or higher. Below $266 puts it back in the prior trading range
- AAPL – remains in a bearish posture within a downtrend channel. Needs $123 to open door to 125 but really needs 127 for a breakout and potential trend reversal. Below 120.50 favors lower and a gap test from 118.79 – 116.36
- TSLA – traders can stay long against 670. A break above 705 opens door to 725. if you get that move roll higher / move stops up. All bets are off if 670 fails to hold.
- MSFT – use 235. Above targets are 237, then the gap at 238.40. Gap fill = 241. 21. Below 235 favors a retest of the recent low at 233.
- AMZN – $3100 is your hourly pivot. Above targets $3150 while below targets 3050. FREE50Club levels continue to provide solid trading levels
- GOOGL – use 2050 as your active pivot. Above favors 2075; below favors 2040 then 2010
- NFLX – 517.50 is the active pivot. Above favors 525 then 530. Above 530 opens door to higher prices; Below 517.50 favors 510 / 504 / 494
A detailed walk-through of the levels and trading strategy for the indexes is given in the video ( link above) . The static charts are provided for reference. The FATMAAN names are also reviewed in the video.
Stay long against 392.50. Expect higher prices this week into option expiration.
SPY 2 hour
If we pull back to fill the first gap, i think that would be an objective long entry w/ a stop just below.
SPY 30 min
Q’s continue to have a 20/50 ema problem. Price needs to take out $324 to regain firmer footing. Until then I think tactically speaking, fade rips and buy at lows if we pull back again.
QQQ 2 Hour
QQQ 30 min
New highs mean you gotta buy.
IWM 2 hour
Look for long entries, not short entries unless on a very tactical basis. The levels are clearly marked.
$IWM 30 Min
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