Tickers discussed: SPY, QQQ, IWM, APTV, BWA, LKQ
The Daily Profit Compass provides the stock market outlook 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.
Earnings Calendar
We are on the downhill side of earnings season but still plenty of names to watch.
Market Observations, Technical Developments, Outlook, and Strategy
Happy Monday
Everything green this morning as equities, oil, gold and silver all move higher. The one exception is bonds with look to be trading near support at $139.50.
The pattern recently is to gap up price on the indexes, then trade in a micro range the rest of the day. Be ready for the unusual. Either a gap n go or a flash back fill of the morning gap. If you’re more of a swing trader trading the daily time frame, stay long and ratchet up stops. We do not have any sell signals yet.
Pre-market Movers
$MCD, $UAA Watch there 2 for possible day trading ops as both trade lower this morning on headlines.
Strategy Update: Maintain bullish bias. In the notes below I suggest locations to move stops higher. This move higher has been very “gappy” with gaps stacked all over the place. THis makes for instability but isnt a sell signal. Simply watch close and know your exits. I think its prudent to continue to ratchet up stops and not sit complacently by. If you’re in options, continue to roll up and out regularly harvesting profits and staying long. I see pros do this all the time. It is one of the powerful features of options to be able to do this. Take advantage of it.
Sector ETF’s for Earnings Season
If you have a sector you are particularly interested in or have an opinion on, seek out a liquid ETF if you want to play during earnings season. Much better than dart throws at specific companies where you will often lose. Look to trade a basket. In your search, make sure you understand if the ETF is cap weighted or equal weight. For instance, $XRT is equal weighted retail, while $XLY is cap weighted and therefore dominated by AMZN and a couple other names being 50% on the index.
SPY Daily – Could not get to load. Sorry!
Swing Traders. Above $301 and bulls remain in control. Swing traders can stay long and move stops up. Consider moving up your stop to $304.75. If in options, roll higher and stay long. Book those profits while you have them.
$SPY 60 minute chart
We are set to gap up $1.50 or so on the open. Watch for a flash back fill to Friday’s close. Other than that stay long. As stated below, consider moving stops up to $304.75.
Bear Set up: Aside from a back fill of the opening gap, The first entry I see on the short side would be a move into the gap at $304.74 with a target of $303.33. New highs are bullish , not bearish. Be sure you are shooting against something tangible on the short side. Short of a liquidation break sparked by the divergent high, there are no natural sellers here.
Bull Set up: If you’ve been long from lower levels, consider moving your stop higher to $304.75. Exit on a move to fill the gap to $303.33. Otherwise stay long. If price were to come back into $304.75 and it holds, it would be a good location to add to an existing long or start a new positions with a tight stop just below.
$QQQ Daily
Price set to open close to 200. The upside measured move target from the consolidation box has been fulfilled. The recent price action is to gap the open, then do nothing the rest of the day, but be ready for a flash back fill of the opening gap to Friday’s close.
Swing Traders. If you’re not already in QQQ from lower levels, be careful about starting a new position at all-time highs. I think you gotta get a retracement to a support level before trying to go long. If you do decide to try a new long, your stop has to be this morning’s open because there will be a big gap below that could get filled. For others already long, I’d move stops up to $197.63 which is the top of the gap below.
QQQ 60 min
Bear Set up: There will be an opening gap. You can try a short if price moves below the open with the target being Friday’s close. Other than that, there is the gap from $197.63 – $197.08. The trend is higher and at all-time highs there are no natural sellers so be careful about trying to pick a top. There are no sell signals, so aside from gap back fills I see short entries limited.
Bull Set up: Move stops up to $197.63 and stay long. A pull back to 197.63 would be a place to add or start a new position if that level holds. Set a stop just below. I expect a back test of $194 at some point but no idea when. I’d expect lots of buyers there. It is a key support level. Any move below $194 would be bearish because it would signal a failed breakout. 
$IWM Daily
Price set to open near $159 so there will be a gap below on the open. A move above $160 clears a path to $170 so its a critical level to watch. Price has already chewed through a lot of resistance and looks strong so there is a great chance we could see $160 taken out this week. Be ready to start a long there or to add to one you’ve already got going.
Swing Traders. Move stops up to $157.50. Price should not go below $157.50 if the bull case is ongoing. Anything above is constructive and prices below, not so much. THe overhead targets are $159, then $160.
$IWM 60 minute
Bear Set up: You can try shorting $159 or $160 with tight stops, otherwise gap back fills are your best bet. A move back below $157.50 would be another location. THe trend is up so keep that in mind.
Bull Set up: If you’re long from lower levels, decide early if you’ll exit early on a gap back fill or hold through it. If you’ve been actively trading the 60min or lower time frame, i dont see a compelling reason to hold through a down move to fill the lower gaps. I’d exit on the gap entry and look to buy back the position at lower levels at key support.
************************** TRADES **********************************
Opened small starter positions in
GDX Jan 28C At $1.53
TLT Dec 143C at $1.54
Trade set ups
$DJUSAT – Auto Parts
Continues to move higher. Several names below breaking out.
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Notes:
The charts are and levels are provided as well-informed guidelines. That said, please be aware that exogenous events like surprise tariffs or other events can easily move price through support / resistance zones.
Also, set you stops according to your own risk tolerance. The ones I have provided are to be used only as a guide. The most important aspect of your stop is to honor them. Some trades work, some don’t. Honoring your stop will ensure your loss on a failed trade will be minimal.
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