Tickers discussed: SPY QQQ IWM CHEF CVS XES FRPT 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 – Get used to it
The last time I mentioned the trick, trap fool, and frustrate crew, I got an earful from one member saying I had a “victim mentality” and that he wasn’t frustrated or tricked at all. First off I rarely play the victim nor do I often whine a lot. Secondly the “trick, trap, fool and frustrate crew” doesn’t really exist. It’s a euphemism for all the head fakes, trap doors, and booby traps the market throws traders to keep them unsettled and off guard. Yesterday was a tricky tape with a massive reversal head fake. If you didn’t think yesterday was tricky and you saw the massive reversal the whole way, good for you and good trading. There was a lot of money to be made yesterday for the nimble and flexible minded. IWM traveled 7% peak to trough; you often don’t get that in a month.
As Mark Minervini points out, he was shaken out of some positions only to see them reverse and likely go higher. So in effect, he sold the head fake low. If you were the one who bought his shares, good for you. For those that are pissed off because I told you to ratchet up stops to protect your wins, and then you saw the stocks reverse and go higher, sorry. As Minervini says, you can’t manage risk in a rear view mirror. When trend lines break and stops get taken out you have to act. If you’re a guy who leans on “i think its gonna reverse” don’t even bother setting alarms in the first place. Getting stopped out and then having your stock reverse is part of trading; get used to it.
Earnings
THe season is winding down, but still some names to watch. WDAY, ADSK, NTNX, TOLL, COST, OKTA , ULTA, VEEV among others
News Flow
- China passes HK Security Bill defying Trump
- House passes Uigher Bill in rebuke of China
- Trump threatens social media companies over censorship and bias
- Roche partners with Gilead on Covid Combo Cocktail trial
- CoVid’s grim milestone: Over 100,000 Americans lost to Virus
- Tech remains soggy with /NQ futures down 0.40 – 0.50%
- Hold till it $HTZ !!; Uncle Carl capitulates and liquidates his position. We all been there right
Sector Summary
A near identical mix as on Tuesday. Financials, Industrials, and other cyclicals seeing strong bids.
Graphics to think about ( Courtesy of themarketear.com )
Rotation
The market continues its rotation into beaten down financials and industrials. Should be a tail wind for IWM and a headwind for Tech / QQQ.
Not a whole lot of commentary today. Let’s see how QQQ handles this along with the FAAMG names. Yesterday they had an impressive stick save, but here this morning QQQ is down 1% and is below $229. That leaves it vulnerable to a potential rug pull.
Strategy and Tactics – no changes
- Seems like the rotation into industrials / financials and other cyclicals is set to continue
- Watch those FAAMG names and tech in general. They could serve as a piggy bank for sector rotation funds.
- Lack of any downside follow thru continues to be a bullish factor
- Tactical shorts ok, but overall bias remains and should continue to be bullish
- Stay mentally flexible even though your heart may urge you to go “all in”
- Keep ratcheting up stops if you have nice runners. Have a plan to get paid.
- Software and mega cap tech remains soggy. Watch out if they really go after mega-cap tech. Major averages won’t be able to hold up with regional banks and beaten down industrials carrying the weight.
FAAMG Update & Trading Guidance
- The FAAMG names made in large part a nice recovery and held key support areas.
- Watch $FB today as blusters and possible action by Trump in social media space may buffet price more than normal.
Charts in Focus
Chart Blast.
$CVS Breakout and long trigger.
$FRPT Alarm $78 for a breakout with massive cup n handle working
$CHEF Breakout and long trigger; open path for a 200ema test down the road. THe 50ema is your line to shoot against.
$XES An ETF we highlighted the other day. Moving into the $10 gap is the long trigger. Massive overhead price void means not a lot of OH resistance and a R/ R off the charts.
Index Chart Review
SPY 2 hour
SPY 30 min.
QQQ 2 hour
QQQ 30 min
IWM 4 hour
Showing you a longer view so you can clearly see the overhead level of resistance and target. A break above $143.50 with a hold offers the potential to make a run to $155.
IWM 30 min
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