Daily Profit Compass Oct 15

Tickers discussed: SPY QQQ IWM  FATMAAN names, BAC, GS, KRE, XLF, HACK, IGV, SKYY

The Daily Profit Compass provides a technical review of the stock market today. 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 

 

Companion Video 

  • The companion video provides the key actionable levels and trading plans for the indexes, FATMAAN names, and other charts of interest. Viewers are welcomed to run the video at 1.25x to reduce run time without loss of quality.

 

Trade Tracker Update

$BAC and $GS

The Song remains the same. Different numbers, mostly the same result. Soggy and lack luster trading.  Not shown $WFC off 6%

$KRE

Regional Banks will not have income from trading / capital markets to help them like the big backs.

$XLF – Missed entry

$FSLY drops a bomb

Fastly came out last night with surprise negative guidance that they will miss sales numbers. The stock dropped $30, but as fortune would have it, we were already out having closed our long earlier in the day.  This is a prime example why we roll and Protect.  Can you imagine sitting on our Oct 23 105 Calls with over $20 of embedded gains and waking up to a stock at $80 and taking a a complete loss of both profit and premium?  Going forward, make sure getting paid a part of your plan.

Tangentially you will see a bunch of down moves today in high-valuation software names as the $FSLY news puts the fear of god into the longs. I am hunting for set ups. You should do the same. We may see extended corrective activity. The news also may put the brakes on the typical “run up into earnings” we often see.

$IGV / $SKYY / $HACK

These software ETFs that were good break out candidates 24 hours ago, now look like double top candidates. All 3 printed red candles yesterday at the prior highs. You’ll see bigger red candles today after the FSLY news.  While the entry won’t be super optimum, a short against the high would be objective in these ETF’s.

$NIO Pops

We were fortunate to be long when NIO got the upgrade and popped 20% ++.   We rolled higher from Nov 21 C to Nov 26 C and booked some profit while still being long. Now the stock sets up as a bracket trade. If price breaks above $27, traders can either initiate or Add long exposure using just below $27 as a stop.  Now there is a big gap to fill below. Any price moves below $23.73 not only is a signal to be out of any long, but in fact to go short for a potential gap fill all the way back to $22.

 

INDEX CHARTS

General Commentary on Indexes

As noted yesterday in the Market Pulse ( HERE ) the technical picture for the indexes has begun to deteriorate. We have bearish momentum crosses on the higher 2 hour time frames and in several instances, the RSI has violated uptrend lines. These are precursors to further corrective activity, either in time or price. This morning we are down 1% or more across the indexes. I do my best not to try and assign reasons for the decline ( because Asking Why? is not helpful ) but if you need a reason, go with ” Election uncertainty, and no stimulus package”

Market Keys for Today

  • The anticipated opening range will leave a big gap above to yesterday’s close. For the nimble, active trader this is well worth being aware of and participating in if you get a clean entry.  For the longer-term swing traders in the group, if we get that gap fill higher, it would be a great location to either trim longs, add protection, or both.
  • There are also gaps below price that will naturally act as targets on any follow through move to the downside. Make sure you have the locations handy if you are actively trading.
  • The Ultimate support below is the trading ranges we just broke out of last week. ( SPY $341.50 / QQQ $280 ) Those levels simply have to hold if tested.  As we have discussed many times, you dont ever want to see price break back below a well-defined level after having just broken out.  It would say, “That breakout was fake”  and then the price target becomes the bottom of the box, which in this case is $20 lower for both SPY and QQQ.  Again, not a prediction, just a possibility if things get ugly.

SPY 2 Hour

As of 6.30am price set to open around $344.  Almost equidistant between yesterday’s close and key support at $341.50.  Coin flip as to if they break higher or lower out of the gate this morning.  Note the RSI TL break and PPO bear cross which are supportive of lower prices.

SPY 30 min

QQQ 2 Hour

Price closed within its channel yesterday, but is not set to open around $287-$288 and within the open gap. I have a support level coming in at $285.  Additional minor levels are $283 and then $282 at bottom of a small gap. Ultimately as mentioned above, $280 is the must hold level.  A price close above $293 would fix everything.

QQQ 30 Min 

The 30 min view gives traders a clean look at the various support and resistance levels to shoot against.T

IWM 2 hour

Price set to open at $159.50 which is below the bull / bear pivot at $160 we previously identified.  Lean bearish as long as price is below $160.  THe gap below is a natural target for price with the top of the gap and bottom of the gap acting as potential areas to look for a bounce.

IWM 30 Min

A drop below $162 would favor a move to the pivot point at $160. As long as $160 holds, the door is open for a move to $167.50 which was the prior high.

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