Daily Profit Compass May 18

Tickers discussed: SPY QQQ IWM PYPL W    Strategy & Tactics

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 – Rewarding Pursuits

No doubt that trading can be a “rewarding pursuit”.  There’s also no doubt the most aspiring traders either quit or go broke prior to the “rewarding phase”.  Stay patient and trade small until your process begins to deliver consistent profitability. In this way you’ll be able to reach the rewarding part of your pursuit.

Earnings

On the earnings front, the focus turns to retail as HD / LOW / KSS / TGT / WMT / URBN / AAP / ROST report.  In tech land, BIDU / BABA / PANW / SPLK / ADI / INTU also report.

 

News Flow

  • Powell’s “no limits to what we can do” comments on 60 Minutes give traders the green light to buy, buy, buy.  Gold and Oil pop
  • $MRNA reports positive data on its vaccine tests. Aiming for July to launch Phase 3 trials. Price up 20% ; futures pop
  • 100M people in Northeast China face new lockdown as covid virus threat re-emerges
  • Softbank Vision Fund lost $18B; WeWork valuation now about $2-$3B; a small fraction of prior estimates.
  • Ideas in DC are being floated to offer companies subsidies to pull supply chains from China and “bring them home”
    • Occupy Wall Street 2 stuff:  We’re going to pay companies who off-shored millions of jobs to come home after they got burned?
    • Elsewhere companies are going gangbusters laying off people but executive bonuses have not been touched.
  • US and China wrestle for control of semi producer TSMC
  • Traders bet the UK will have negative rates by end of this year
  • AAPL to re-open 25 US stores this week bringing the worldwide tally to 100 out of the nearly 800 stores worldwide
  • GRUB rebuffs UBER’s latest offer as price remains sticking point.
  • US Covid Testing run rate finally hits 300K / day.

Sector Summary

Oscillator Watch

$NYMO and $NAMO  middle of the range. Not helpful until extremes are reached.

Wave 2 DATA

5/18 None

5/19 Housing starts / Redbook / Jerome Powell speaks at 10am / Rosengren at 2pm

5/20 Mortgage applications / Oil inventories / FOMC minutes at 2pm

5/21 Jobless claims / Flash PMI numbers / Philly Fed Survey / Existing Home sales / NatGas inventories / Powell speaks at 2.30pm

5/22 Rig Count 1pm

BOOM:    Strategy and Tactics 

  • The bounce off the recent low has gone further than expected and price is now at the top of the bounce range for SPY / QQQ
  • The bear case has been weakened greatly but until price closes above last week’s breakdown candle high, is not completely eliminated.
  • If you stayed long into the weekend, kudos to you. Now is the time to ensure you get paid for being right by moving up stops or rolling strikes higher.
  • Be aware of the large gap below that will be created on today’s strong open. THis gap will eventually get filled. Please mark it on your charts.
  • Gold up 1% in pre-market trading. GLD / GDX fresh breakouts working. Stay long

FAAMG Update & Trading Guidance

If you’re a bull and you think the bounce will drive higher, FAAMG is the place that’s been working. If this bounce has legs, I’d imagine these will at least perform in-line if not outperform.

  • $FB – A move above $215 opens the door to higher prices.
  • $AAPL – Can be long against $302.50 but still vulnerable to a pull back to $300 which is first support.
  • $AMZN – recaptured $2375; not my cup of tea but if you’re adventurous you can be long against $2375; still looking for $2450
  • $MSFT – Traders can be long against $179; moves above $187 opens the door to attack the prior high at $190.
  • $GOOGL – price open for another try to take out $1410 which was the high from last week. A price move below $1320 opens door to a move to $1280

Charts in Focus

$PYPL

The bracket trade set up from last week is still in effect. Alarm the trading range and go with price on a breakout / breakdown.

$W

Alarm $163 for a potential $30 gap fill below. You can be long against $163 as well and look for a move back towards the highs near $185.  An unreal move here from $23 to $170++ since the March low.

Index Chart Review

SPY 2 hr

SPY 30 min.

QQQ 2 hr 

QQQ 30 min

IWM 2 hr

IWM 30 min

 

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