Tickers discussed: SPY, QQQ, IWM, TLT, USO, GLD, SLV, CAR, GH, VIX
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
Costco on Thursday highlights a slow week of earnings.
Market Observations, Technical Developments, Outlook, and Strategy
Market Recap: A nice upgrade for AAPL helped lift the Q’s and spirits in general to wrap up September with a green day across the board. Prices for the indexes rallied to resistance which capped the morning advance for the balance of the day. Under the surface, AMZN and FB which both have been weak, are threatening to break out on the 60 min chart. If these 2 can bolster the Mega Cap FAAMG segment, QQQ could be in for a big rally.
Gold and Silver, the darlings of the summer trade, both were battered by relentless selling and both lost key support levels. THe path is now open for lower prices for both as the next support levels are at lower levels.
Bonds opened lower but rose steadily through the day closing on the highs of the day. Price for TLT sits just below $143 which is a key level. A break above opens the door for a potential run to prior highs. But while below $143 it is subject to pull backs.
I have been watching the VIX carefully. A move above $18 would open the door for a potential spike.
The trading environment will likely continue to be choppy with news flow being the dominant factor until earning season really kicks in.
SPX Broadening Top Update
Not a lot is new since price is above the August trading range and below the top of the formation. Keeping an eye on it for perspective but this chart really isn’t conducive to more active trading.
S&P Leaders
ULTA $25 off the lows with a massive OH gap to fill.
S&P Laggards
Oil names pepper the laggard board.
Hong Kong News: Fierce clashes between protesters and police rage on as Premier Xi pledges national unity. So far, the turmoil in HK has had little effect on global markets.
China News: Markets closed the rest of the week for Fall Festival.
Currency News: Quiet as USD sits at 2yr highs
SAFE HAVENS
Gold and Silver were hammered in yesterday’s trade. Both have fallen from key support and are now testing lower levels. Bonds fared better putting in a green day.
Bonds. I am a buyer with a break and hold of $143. Price still subject to a sell off while below 143
$WTIC / $USO I left a lot of money on the table by closing out my short position Friday as price broke down and moved toward $11.10 support. Watch for a kick back rally to $11.45 which is a key spot. Breaks above the downtrend line would likely spark a bigger rally.
On the $WTIC chart I have the following levels as support. $54.80 / 54.15 / $53.50 / 52.90 / 50.90 ( from the 60m chart )
$GLD Terrible day for gold as it loses the 50ema and key support. I see this moving to $136 as price is now in an area of thin price / volume support.
$SLV Testing a lower level of support at $15.75. Needs to hold here or price would likely move lower to the next level of support.
$VIX
To my eye, the VIX is aligning for a moonshot with price closing above prior resistance 5 times. Closes above $18 accelerate the launch sequence. RSI has broken out and PPO has put in a bull cross. The technical elements are aligning for higher prices. I bought a small number of VIX October 16 $17 Calls
Strategy Update:
Today I may be forced to cover short exposure if price breaks out on the indexes. The market remains a jump ball between bears and bulls but if price breaks above resistance, price must be respected. Until SPY follows QQQ lower, bears are likely to remain frustrated. Gold and Metal crumbled which is a check mark for bulls. The Bulls were likely encouraged yesterday as FAAMG names perked up with the AAPL upgrade and AMZN, FB showing signs of life.
Risk off trades : Breakdown of metals may tip balance toward equity bulls.
$SPY
Price opened higher and in the process left a gap behind that now remains unfilled. As you can see, there are lots of gaps below to be filled.
Daily
Swing Traders: I am focused now on key resistance at $297.50 and key support at $295.50. A break above $297.50 with a hold would tilt the short term toward the bulls. A break below $295.50 would favor bears. In between will be choppy.
SPY 60 min: For short-term active trading, use $297.50 as your bull / bear pivot. A break and hold above would likely spark a bigger rally. Below keeps price contained; a move below $295.50 opens door to further downside. Note the open gap from yesterday between 295.92 and 295.40
$QQQ Daily
THe AAPL upgrade and perkiness in AMZN and FB lifted QQQ. $190 is a key level of resistance. Above and Bulls would have the recent highs as a target.
Swing Traders: Use the uptrend line as your bull / bear pivot. Above the line and bulls stay in control. A break below would favor lower prices. A break below the Friday low would likely trigger more intense selling.
QQQ 60 min:
The downtrend line is being tested and is therefore an objective location to look for either a long or a short. A break above would favor a move higher which would be supported by the recent divergent low. A rejection from the trend line would be a nice short entry with the target being Friday’s low. Note the open gap from 187.40 to 187-03. Not a big gap, but there all the same.
$IWM Daily
Price made a run at the resistance zone at $152-152.50 but was rejected.
Swing Traders: As long as price remains below $152.50, the bears are in control. A break above though would give bulls room to run. Stay short against 152.50, flip bullish if price takes out $152.50 with a target of $154.
IWM 60 min
There is a resistance band between $152 – $152.50. A back test of that area and / or a check to the downtrend line would be objective shorting locations. A break above the DT line would be bullish and likely spark a bigger rally.
************************** TRADES **********************************
Triggered Trades – none
$CAR is again testing support; get short on a break of $47 and look to the prior lows as the target.
GH quietly off 30% yet breaking below support into a volume / price air pocket on the chart.
I opened a small position in VIX October 16th 17 calls.
Open Positions
GLD oct 142 / 146 call spread at $1.25 closed at 50c for a loss.
QURE Oct $45 P at $3.61 – Closed Friday at 43%
These metals trades are toast 🙁
GDX Oct 30 C at $1.47
WPM Oct 30 C at $1.32
PAAS Oct 18C
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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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