Daily Profit Compass Oct 23

Tickers discussed: SPY QQQ IWM  SCCO FCX KRE INTC  TSCO OKTA XRT

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 

 

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

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Market Snapshots

Charts in the Spotlight

$KRE – Regional Banks

Clean, clear, and impulsive breakout yesterday that cleared the 200ema for the first time since March. Also notice the price entered a relative void where price could move quickly.   I like KRE long against either $41 or the 200ema.  The nice thing about KRE is that you can sit in it through earnings season without the fear of single stock risk.  It does not matter if you “buy into” the rising rate story or not, price has spoken and IMO the path of least resistance is higher as long as price holds above the 200ema.  Note:  KRE is more of a direct play on banks than is XLF.  XLF is loaded with insurance companies and all sorts or other financial institutions.

Got Copper?

Copper is beginning a fresh leg higher after some consolidation.  So. Copper ( $SCCO ) and Freeport ( $FCX ) are big copper producers and offer a way to play if you are not comfortable dealing with the commodity directly.   Just a couple of days ago $SCCO was a long trade idea.  It is still a long against $48.50. Freepost has been on a tear, but before you say too far too fast, consider FCX was a $50 stock not that many years ago. I’d want to see some signs of consolidation like SCCO has just has before diving in.

 

INDEX CHARTS

While SPY and QQQ remain largely trapped in volatile trading ranges, IWM has shown much more positive price action.  Interest rates are on the rise and just broke above a key resistance level. Rising rates, in general, are a head wind for tech and a tailwind for  cyclicals and banking.  That said, we’ve had several convincing “rotation to value” rallies over the summer months, they have been faded.  No way to know if it will be different this time but for now at least the money is flowing to cyclicals and value which are heavily represented in IWM.

SPY 2 hour

PPO trying to put in a bull cross on momentum while RSI is still below the 50 line. Price is at the top side of its down channel. A breakout gives price room to $346 for a rally but what really needs to happen for bulls is a break above and hold of $346.  Then the path would be cleared for $349. 50.   Any sustained move below $341.50 would open up a wide variety of scenarios, mostly bearish.

SPY 30 min

Bulls need price to break above the downtrend line above $345.50 / $346.  Otherwise any price movement can be chalked up to volatility.   $341.50 marks key support.

QQQ 2 hour

A break above $285 would be a good start for price to prove it is reversing, but until price pops $287 and holds it will it have put in a higher high.  Price moves below $283 and certainly $280 would be bearish developments. Note the flattening PPO. Looks to be inching toward a bull cross

QQQ 30min

Here you can see the volatility box between roughly $287 and $283.50. A long as price is contained within the box, everything is pretty much noise but traders are welcomed to trade the range. The levels are well-defined…just respect your stops.  Yesterday price made a run at $282 but recovered the range giving the morning price action a look below and fail feel.

IWM 2 hour

The rise in yields has boosted IWM. Price recovered $162. The target now is $164, then after that 167.50.  Breaks back below $162 would not be that welcomed. You want to see some follow through from here. Stimulus talk and certainly if Pelosi / Mnuchin waltz out to announce that they have reached an agreement in principle, it should boost IWM.   I do not think there is enough time to get any agreement into law before the election.

IWM 30 min

Improving indicators are pointing the right direction and are supportive of higher prices. Price needs to clear the minor downtrend line in brown for a run at $164.  A breakout above $164 targets $167.50.

 

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