Tickers discussed: SPY QQQ IWM SMH AAPL AMZN Strategy and Tactical Update
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:
Earnings
News Flow
- The Global liquidation rolls on
- Fiscal bazooka relief bill fails to advance after key vote
- FOMC’s Bullard suggests unemployment could touch 30% and says the FED would take any action required
- $GS and $MS both roll out lower estimates for Q2 and Q3 GDP
The Abyss
Equity futures have bounced a little from limit down to about down 3%. Expect erratic action and whipsaws to continue as news flow hits the tape. One consideration to keep in mind is this stimulus bill. Everybody has been noting the oversold readings etc. Whenever the big stimulus bill either makes progress or passes, it might be the catalyst for a big spike. Very hard to quantify big but anyone holding the “short bag” will feel some pain.
Keep proceeding as we’ve discussed.
- Identify the mistake you can’t afford to make; then make sure not to make it. It’s very hard to stay in business to make money if you are dead.
- Tactically be long or short based on technicals, not on if you think a stock is cheap. Those aspiring for “hero status” by picking a bottom will get run over
- Cash is king. Make sure your overall exposure remains at a level where you can be 100% wrong and still maintain liquidity in your trading account.
After yesterday’s note, not a lot to add.
Index Chart Review
SPY Daily
The December 2018 low of $235 is a major technical level because anybody still holding longs purchased in 2019 is losing money and therefore is now a vast source of supply. Any rallies back to $235 represents an objective level to try a short with a stop just above. Recapturing $235 would be the first important technical achievement for the bulls. The open this morning should result in an OH gap that will need to get filled. Last week we saw a couple of major gap fills that would have been nice to capture and maybe you did capture them. Watch the opening price action for a directional bias. A downside target if we keep going lower is $213.40
SPY 2 hour.
There is absolutely no reason to jump the gun trying to get long. We tried to get long on Thursday on the 60min breakout that failed. THe 2 hour chart provides a very nice trendline to use as a reference. Let’s wait to get a closing candle above the trend before trying to get long. $235 is only $7 away and is first resistance. One could may a very solid argument to stay short or in cash until price is above $235.
QQQ Daily
Unlike SPY, QQQ held support at $168.19 ( Jun 2019 low.) This is your short-term bull bear toggle. It’s remarkable that QQQ remains $25 + dollars above the Dec 2018 lows of $142. Any break below $168 would target $142 over time.
QQQ 2 hour
Had the false breakout on Thursday / Friday. ( Bull sets ups often fail in bear markets ) No urgent need to try and be long until price again takes out the DT line.
IWM Daily
IWM has been leading to the Downside and has already trading well below the Dec 2018 low. I see price at least finding $90 over time. While a kick back rally could bring price all the way to $125 IMO it would be a prime shorting location.
$IWM 2 hour
Use $102 as your short term bull / bear toggle. Of all the indexes I think IWM is the one to lean on the short side. Very weak price action.
$SMH Daily
Price has been probing 97.50 key support. On a break below get short and look for 92.50 as T1. Remarkable that the Dec 2018 low is way down at $82.50.
$AAPL Weekly
Keep your eye on $220. Its a key level on the weekly. A break below would put price on the wrong side of quite a number of technicals. How price behaves at $220 will say a lot about the market posture. Bulls should step in at that level, if they don’t it will speak volumes.
$AMZN Weekly
Price is bouncing inside a trading range between $1650 and $2050. A weekly close below $1650 wold open the door to lower prices. Look how far away the Dec 2018 low is.
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