Daily Profit Compass March 24

Tickers discussed: SPY QQQ IWM FB AAPL AMZN GOOGL MSFT NFLX TSLA TLT DADA OIH

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 

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

Treasuries – Big 5 yr Auction today and 7 yr auction tomorrow

The last time the 7 yr auction was held there was an epic fail that roiled markets. In fact it was so bad there was the worst foreign participation EVER recorded…. that’s a long time. Watch the the reaction in TLT / yields closely.  Given the tight correlation between the bond market and equities lately, we’re all bond traders now.  Recently we had a bear trap / false breakdown below $136 and now has popped above. A move above $138 and the 20ema will open up the possibility of a move to the top of the box to $141, with an outside chance of a tag of the 50ema at $144.  Yields are going higher………stalking this one for a fresh short entry after the kick back rally fizzles out. Rates will head higher as the re-opening picks up steam.

Trade School:  Cyclical / Value / Commodity Pull back will offer this classic set up across the board

THis is the chart of the OIH oil services ETF, but please view it as a general template for a chart set up. As the cyclical / value / commodity / oil stocks come off the boil after a torrid run, there will be a slew of charts that will set up like this.

  • Price will pull in to back test the prior breakout. THis is a key and common technical move.  Typically this is an area for an objective long entry with a stop just below.  However, if the selling pressure is intense, this back test will fail. For instance, they keep selling oil or Europe continues to have Covid issues cyclicals may struggles.
  • Although I have dropped in all the fibs, the next super important location is the 50% / Halfback long location.   Giving back half of a strong advance is common and a great and very objective long entry location.
  • Both of these potential entry locations give market participants “another bite at the apple” to get involved in a trending market
  • IMO these stocks will drive higher as re-opening emerges.
  • Mark up a bunch of charges and set multiple alarms on stocks you’re interested in possibly trading.
  • Once you get the alarm to trigger you can re-assess and decide if you want to get long.

Vicious Sector Rotation 

Euro concerns about the re-opening caused and accelerated sell off in the cyclical / value / energy sectors with IWM having its worst day in 9 months selling off 3.6%.  That money is flowing back into tech as this vicious rotation extends itself.  Very tricky market to navigate and trade. Stay a day too longer here or get in a day too early there and its easy to get your face ripped off. THat said,  for active traders that vol can translate into opportunity.  If you keep your wits about you, you can mitigate swing-trading PnL nitemares with nice intra day gains either as active trades or hedging activity.   Be careful out there.  If you are confused or unsure what to do, do nothing.  At the least back off on position size until a trend emerges that you are more confident in.

Discussion Topics

  • JPOW and Yellen return to the Hill for further testimony
  • Cyclicals and Value dwarfed as Euro Covid fears and further lock-downs throw cold water on the re-opening trades
  • Money finds FATMAAN names as a vicious sector rotation rips faces off traders all over the place.
  • Trade School: Classic technical set up coming to a chart near you. Be ready for it!
  • Treacherous market.  No time to attempt hero status. Trade small if at all to preserve capital.
  • 5yr bond auction today and 7yr auction tomorrow could move rates, bond market and by extension, equities.
  • Tanker stuck in Suez canal influencing oil market this morning, but inventories set to report at 10.30 set to rise putting further pressure on oil prices.
  • INTC announces $20B capital project to open 2 new chip fabs in Arizona due to open in 2 years.
    • . Aligns well with push for increased domestic chip production.
    • You will probably see more companies announce similar moves

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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