Daily Profit Compass May 26

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Tickers discussed: SPY QQQ IWM   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 – Time precedes Success

In his best selling book “Outliers” Malcolm Gladwell set forth his hypothesis that it takes 10,000 hours of concentrated practice to become great….and that’s if you have the innate talent to begin with. For instance, the Beatles played in Hamburg over 1200 times between 1960 – 1964.  Talent for sure, but thousands of hours of practice crystallized that talent into greatness.

In this age of instant gratification, I think we often forget at best, or dismiss at worst, just how long it takes to become “great” at anything. It doesn’t matter if we are talking golfing, wood working, plumbing, or trading. Mastery takes time. The good news for aspiring traders is that you don’t necessarily have to be a great trader to make a good living. If you’re a great, natural trading talent, you may indeed achieve greatness. Both in either case, its going to take a long time to reach your peak.  Keep at it folks. Work harder. Maintain focus. Learn from your mistakes. Respect risk and trade small so you don’t run out of money while you’re learning. Adjust expectations and your time line.  The most important factor in all of this is and what makes achieving your goals possible, it your love of the craft of trading. If you love it, devoting 3-5 years to becoming consistently profitable should be a fair price to pay.

Question: Do you think the hundreds of thousands of new traders coming into the market are aspiring to greatness or looking for a quick hit?

Earnings

THe season is winding down, but still some names to watch. WDAY, ADSK, NTNX, TOLL, COST, OKTA , ULTA, VEEV among others

 

News Flow

  • Hong Kong protesters come roaring back; HK Gov Carrie Lam supports Beijing -backed Security Law
  • Novavax starts clinical trial of Covid Vaccine
  • AAPL to begin re-opening of stores in Japan this week
  • Barron’s pumps $DBX in weekend issue
  • Stanley Ho, the godfather of Macau gaming, dies at 98. Ho started his career smuggling jewelry in WW2, then made a fortune trading kerosene after the war. In 1961 he outmaneuvered rivals to get the original Macau gaming licence and went on to make Billions. In his spare time he fathered 17 children with 4 women.  Goes to show you don’t need to be American to live the American -dream

Sector Summary

 

Graphics to think about ( Courtesy of themarketear.com )

More or less, the wall of worry.

We did it – Market tags 3000

A market close above SPX 3000 will provide a big psychological boost and also a base of support to add to further gains down the road. Like we said yesterday, a move above 3000 could spark some FOMO as both bulls pile in and those who’ve been try to short the top are forced to cover. THat said, nothing is ever simple. Massive gaps below remain unfilled for now so that risk is very apparent.

Strategy and Tactics 

  • THe bearish set up last week was foiled which shows the underlying bid remains; Bullish
  • Today traders need to be mentally flexible.  A gap n crap would probably surprise a lot of people. Not a prediction, just a scenario. Be mentally ready for it.
  • Bias should be long now but with moderate exposure and stops being periodically raised to limit damage on a fast reversal.

FAAMG Update & Trading Guidance

FB has been the stand out this week  with the announcement of their “shops” initiative. THe rest of the names look uninspired.

  • $FB –  THe standout in FAAMG last week. $227.50 is the 60m pivot. ATH’s and blue sky over head. Manage risk.
  • $AAPL – Needs $320 for higher. Not liking the chart too much. Bearish divergences present and price having trouble here at the top. Not my favorite but price above $320 talks
  • $AMZN – Needs over $2450 to open path to $2625. Below $2450 is problematic from a technical view
  • $MSFT – Laggard last week. Needs 187 to open door to re-test old highs near 190
  • $GOOGL – Price stopped cold at $1410 for 2 days. A pop and hold above opens door to higher prices  A $40 wide gap starts at $1440.

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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