Daily Profit Compass Oct 22

Tickers discussed: SPY QQQ IWM  Market internals, VIX

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.

Earnings 

Airlines / Home bulders and INTC Thursday.  AXP Friday

 

Companion Video

The companion video covers a trading psychology topic, market internals, the indexes and FATMAAN names. Key Trading levels and trading plans along with timely commentary to keep you on the right side of the trade.

Find the Video HERE

Market Internals

Oscillators

We recently flagged NYMO & NAMO as tagging over bought about 10 days ago when the indicator reached 60.  On cue, both NYMO and NAMO reversed.  Now with both in the middle of the range there’s nothing to see or do. The indicators are valuable at extremes but not in the middle of the range.

PUT – CALL Extreme-O-Meter

During this whole cycle, nobody has been motivated to buy PUTs. It has been more a case of  do we buy a massive amount of calls or just a lot?  Call buying remains at extremes ( bars above red line ).  As mentioned many times, this measure / graph is a lot better at calling bottoms than tops.

VIX

In last Weekend’s Navigator we discussed possibilities for the VIX saying a breakout above 27.50 favored a move to 30.  Now 30 is resistance, a break above 30 opens door to 35.  Above 30, targets would be 38 and 45.   As it stands now with VIX at 30, we should expect a lot of volatility with the possibility of spikes.  I expect some vol to be drained from the system after the election if its a clean win. If the election gets contested and ugly, then we might see a dramatic risk/off move.

INDEX CHARTS

SPY 2 hour

Price contained within a well-defined down trend channel.  Bearish possibilities and deeper corrective activity greatly increase if price loses $341.50. Bulls really need to hold the line, or the work gets harder.  When / if price breaks below $341.50, the chances of a retest of the September low greatly increase.

SPY 30 min

Simply put, prices below $341.50 are down right bearish.  If price breaks below, traders can get short, but should view a breakdown in QQQ below $280 to be the confirmation. If QQQ reverses shy of $280, it would likely stop the selling in SPY or even trigger a reversal.

QQQ 2 hour

Well defined downtrend in place. Price needs to pop and hold $287 to show evidence of a breakout / reversal.  Downside support lies at  $283, $282, and $280.   A candle close below $280 would begin to open up a wide-variety of scenarios, most of them bearish.   THe $280 level could not be more important.

QQQ 30min

A $3.50 wide trading range has emerged between $283.50 – $287. You can also see the downtrend channel in place.  $282 and $280 lie beneath ad support areas.  Bulls need to hold $280 to prevent the false breakout look.

IWM 2 hour

THere is an open path to test the gap at $158.50.  Bulls need a 2hour candle to close above $160 before thinking that the selling is over.

IWM 30 min

Above $160.20 opens a path to $162, but honestly the path of least resistance is lower. Favoring at least a test of the gap at $158.50 which we tested last week. On a gap entry, traders can be short for a likely $2 gap fill.

 

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