Daily Profit Compass Nov 13

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The Daily Profit Compass provides stock market technical analysis for the indexes and other market moving names. Key levels and trading locations are provided, along with trading plans and timely commentary to keep you on the right side of the trade.



Market Snapshots

Charts of Interest

$ASHS Weekly – China Small Caps

Traders can set up a bracket trade for the well-defined trading range at $33 and $36 or choose to take a position short against $36 / long against $33 to establish positions inside the range.  At some point you’d think small caps will participate in the China Rally.

$EWZ – Brazil Weekly

If you believe in the reflation story, commodity -driven indexes like Brazil should do better.  Others to watch are Canada $EWC, and Australia $EWA.

Japan’s $NIKK makes a run to 30 year highs!

You have to go way back to 1991 to find higher prices on the $NIKK.  Tradeable ETFs are $EWJ, $DXJ, $HEWJ and likely others.


Rotation – Which way today?

After Monday’s fireworks spurred by PFE’s positive vaccine trial results, we’ve had muted action at the index level as the market wrestles with two diametrically opposed forces.  Are we digesting an initial surge that is leaning to the reflation / re-opening trade  OR was Monday’s move a massive head fake as covid cases globally go parabolic, literally dwarfing the big spikes seen in the Spring?   Although there will be a steady flow of welcome news regarding progress on vaccines in the coming 30-90 days, actual implementation wont begin until Q2 best case.  In the meantime, economic scarring continues as fiscal stimulus rolls off and companies / families face life under tighter lockdowns.

Reversal of the Reversal.  We’re seeing more flows into tech / growth as traders doubt the value / cyclical trade and fade much of the Monday surge. I am not prepared to say the cyclical rally is dead because I think we will see continued news flow on vaccines that will keep a certain degree of bids held in these names.  I think there is going to be a premium on stock picking but with the likelihood of increased volatility to keep everyone on their toes.

SPY 2 hour

Price set to gap open higher by about 0.7%.  If all holds, price should open between $354 – $357.  Be aware of the gap below and the potential for a quick gap backfill. If price is able to take out yesterday’s high at $357 traders can follow price long w/ a stop just below and look for $359 as a first target.

SPY 30 min

QQQ 2 hour

Like SPY, price set to open higher, just above $290. To my eye, $290 is still the pivot. If price can hold that level traders can be long against it.  Below $290 favors another trip to $287

QQQ 30 min

IWM 2 hr

Price recovered the $170 level into the close and is set to open near the top of the box at $172.  Therefore, no changes to the game plan. Short below $170 for a potential gap fill, and long above $173 for a potential run to the prior high at $177.   Traders are welcome to trade the $3 range between $170-$173 as see see fit.

IWM 30 min

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