Daily Profit Compass March 18

Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA TLT TSLA e-commerce

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.

Earnings 

Companion Video – Will Return Tomorrow. 

The video is a detailed technical review of the indexes and FATMAAN names. All the key trading levels are identified along with commentary and trade plans for each ticker. Run the video at 1.25x to reduce run time.

Find the Video HERE

Yields POP; Q’s DROP 

JPOW told the world the FOMC has absolutely no plans to moderate the rise in yields and inflation expectations and in fact wants to verify inflation of over 2% in the data before thinking about thinking about raising rates.  While equities initially popped hugely on that news, the bond market has taken a leg lower over night as yields on the 10 yr have taken out 1.7%.  Now now in 3 successive weeks, yields have popped a 10bps bracket higher.   1.50’s, 1.60’s, now 1.70’s.    Long duration rate sensitive assets are feeling the pinch. Yesterday while most groups advanced sharply off the FOMC announcement, bubble stocks remained down 1%.  This morning, NQ futures are off 1.2% and no doubt the bubble stocks will be off more.

Discussion Topics

  • JPOW signals no change in FOMC policy and the desire to see inflation run hot over 2% before lifting a finger to stop it.
  • Equity markets cheer ( first move fake? )  but now yields are again spiking putting a damper on the post – FOMC pop.
  • Correction:  the 10 yr TIPs auction is at 1pm today; i incorrectly stated yesterday that it was Wednesday.
  • Inflation unleashed:    I expect the massive grab for natural resources and materials to accelerate as the re-opening continues and economic growth spikes
  • Financials:  Rates running should continue to be a tailwind for banks
  • Gold:  Real yields rising is a headwind for gold. The spike in gold yesterday now looks fake. Watching closely. I’m long GDX so i have a horse in the race. followed by the FOMC at 2pm and JPOW presser at 2.30pm are potentially big catalysts in bond / equity markets
  • TLT fell off the edge of nothingness. Price lost a key technical level of 136 and is trading $133.40 in the premarket.
    • I dont see any technical resistance in the yields until 1.92% which was the pre-covid high in the 10 yr.
    • Longer term I think rates go higher; TLT lower.
    • I am short TLT but I never like sitting in a crowded trade but sometimes the crowd is right.
    • Continue to roll down and protect short positions

Thematic Trading Ideas

  • E-commerce under pressure:  2020 was a golden era for e-tailers.  Consumers locked down with no where to go.  But as covid restrictions lift and consumers itching to get out, mingle, and spend, can e-commerce retailers possibly capture the share they did in 2020 this year?  A bigger issue is more likely to be input costs.  Logistics, Labor, raw input costs…….the prices for every single thing is going up.  Are the e-tailers facing a margin squeeze?  Something to watch going forward.    $FDX reports today. They may give insights to the cost trends and e-commerce segment outlook.
  • German Car-makers are coming and $TSLA is in the Crosshairs:  Go to Volkswagen’s Investor relations page and down load the “Power Day Presentation” and yesterday’s Analyst Day presentations.  The EV Model rollouts, technology plans, investments, and goals are staggering.  You can do the same thing over at BMW.  We already know German car makers have a heritage of quality and execution.  I expect models from VW, Audi, BMW, and eventually Mercedes will be every bit the luxury of a TSLA Model S.   All this said, not a word from the TSLA Analyst community on possible impact on TSLA plans.  For sure a VW EV wont carry a Elon Musk glow or halo, but as EV rolls out to the masses I dont think the vast majority of potential users will put a big premium on owning a TSLA.   Time will tell if this has any impact on share price, but at the least, wont help it.
  • Disclosure:  No Positions in e-commerce or Tesla.

 

INDEX CHARTS

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.

SPY 2 hour

SPY 30 min

QQQ 2 Hour

QQQ 30 min

IWM 2 hour

$IWM 30 Min 

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