Daily Profit Compass March 27

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Tickers discussed: SPY QQQ IWM     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.

 

 

 

 

Be neither a Bear nor a Bull because to do so blinds you of the other side. Instead, picture yourself as a leaf floating on a stream ebbing and flowing with the water as it finds it’s path of least resistance. I think it’s a perfect metaphor for what we are striving to do as traders. If you are on the right side of price flow you will have ample chances to make money. If you are on the wrong side, constantly trying to fight the path of least resistance, you’ll find almost nothing you will do works out.  I am not preaching from on high. I am speaking as a trader who has been in both camps.

 

Earnings

News Flow

  • Fiscal Bazooka Bill getting held up in HR; policymakers still remain confident of passage
  • EU bickering holds up European Fiscal Stimulus
  • No help for cruise lines in stimulus package
  • TSLA cuts 75% of Giga staff
  • Restructuring Bankers have had a lean decade thanks to free money; now they are swamped and having to decide which companies to save, and which to let die
  • Oil glut swamps land storage capacity and now producers are beginning to fill up tanker ships.
  • 20% pop has Village Idiots and headline hunters issuing bull market call.

 

Corona Weekend

I’m short on time this morning and running late, so commentary will be light.

We are off some 3% in futures but as we saw yesterday it may mean nothing in the end. We’ll have to wait and see. From a technical perspective we reached most of our higher end price targets for the bear market / kick back rally.  Please don’t buy into all these bottom calls / time for risk asset / the worst is over calls.  An uptrend is defined by a series of higher highs and higher lows. We have likely now put in our first kick back high. The next step is to either back test the low or make a higher low.  Bottoms, especially after 30% dumps, are a process. If you want to be the guy trying to buy the low tick you are welcome to try, just realize that it wont be based on any technical factor I can see.  I am still in the camp of a “Wave 2” washing over the market as the magnitude of this economic sudden stop is realized.  We are still in the beginning stages of the infection rate and new hot spots are emerging.  That’s all talk though. If price prints higher highs and higher lows we will know this market is taking a positive turn.

Wave 2 Data Flow

  • 3/27 Personal income / Consumer Sentiment

 

Index Chart Review

SPY 2 hour

Just a beautiful study in trend lines, fib retracements, and  kick back rallies. So much to learn from this view.  See the chart annotations for guidance.  Given we are down in futures 3% its likely we will get a sell signal today.

 

SPY 30 min.

A break of the rising wedge will give us a sell signal. THat said, if things reversae and price recaptures $260 there is an outside chance for a run to 272.50. A slim chance but in this market nothing can be ruled impossible. Use the levels and chart annotations as your guide.

 

QQQ 2 hour 

For all practical purposes our upside objectives for this rally have been met. A move above $192.50 offer the possibility of more but those possibilities are slim.

Refer to chart annotations for details.

 

QQQ 30 min

A break of the rising wedge will trigger a sell signal . THat coupled with a move back below $186 will likely confirm that the downtrend is resuming and to flip our trading bias back to the short side after a nice relief rally.

 

IWM 30 min

Price spent most of yesterday pinned below $117 and the 200ema on the 30 min chart. A sellsignal would be triggered on a break below the rising wedge. All the targets on the way up would be support levels on the way back down.

An important point. A break back above $117 would be very bullish and would put price in a big gap. If that happens, set aside everything else and get long IWM for a potential gap fill all the way to $125.  File this away in case we get that move.

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