Daily Profit Compass October 18

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Tickers discussed:  SPY, QQQ, IWM, TLT, USO,  GLD, SLV, UUP, GDX,  EA, ATVI, TTWO,  BURL, EL, DOV

The Daily Profit Compass  provides the stock market analysis 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

Market Observations, Technical Developments, Outlook,  and Strategy

Market Recap:

Quietly IWM is making a move higher while QQQ / SPY remain stuck under thick OH resistance.  IWM was up a nice 1.2% while SPY / QQQ just moved fractions.  True also is that IWM still has upside potential as the daily indicators have an emerging bull posture supporting the move.  If you have not been following along on IWM, I’d suggest keeping an eye on it.
The software sector sell off took a breather as most names were in consolidation mode after steep drops Wednesday.
I think we will continue to see trading within a narrow range until the FAAMG names begin reporting, although there is a BREXIT vote on Saturday which could provide some lift if they agree to some kind of deal.
Other Developments
The $UUP has broken some key support areas as the $USD continues to pull back. A weaker Dollar would be supportive of oil, precious metals and EEM. Bonds remain in consolidation after a pullback.  THere is one key support level remaining below. If that gives way, we’ll have a full on bonfire going on with bond prices.  Things will head south quickly.  See the chart below for details.
Pot stocks are worth watching for a relief rally that is beginning. $MJ ETF was up 3.6% with sub-components higher. Worth a look.  Because of the unidirectional sell off in the sector., even a simple 38% fib retracement is a real money bounce.
Note:  FOMC speakers will be out in full force today with 4 Governors speaking throughout the day.  The FOMC rate decision is in 2 weeks. Hints may be given on future policy.
Note:  October OPEX is today; Please review your positions to ensure you don’t get any unwanted stock assignments.  Roll out any positions you want to keep.

Strategy Update:   I remain light on positions.  While there are always intra-day trading ops and swings on non-correlated assets, the market environment remain choppy and not very conducive to multi -week swing trades.   Remain nimble and flexible in both your thinking and positioning.  If active, short -term trading is not your thing, wait for solid long-term buy or sell signals to emerge and / or trade small if at all.

ETF Mode 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.

S&P Leaders

S & P Laggards

Hong Kong News:  Nothing new

China News:   Just waiting for tweets…….

Currency News:  British Pound ; big Vote tomorrow on BREXIT plan.   $USD stumbling and pulling back. ( chart below )

 SAFE HAVENS

Bonds.  No Technical changes. Price consolidating on support.  A break below $137.50 would be an outright short

 

 

$USO  Choppy action.. A move to $11.62 – 11.64 area would be a 38% fib retrace of the big down move. That would be an ideal place to try a short.   From here, a move back below $11.10 would be bearish. .

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   waiting for a breakout.   Key levels on gold futures ( /GC ) are $1492 and $1500.

$GDX –  Yesterday in the trade ideas section, we noted that the miners were sitting on support and it was an objective location for a starter long.  Got a nice 1.2% pop today.  A break above the downtrend line would be a place to either add or start a new long.

$SLV – Baby breakout working

$UUP  Price dropped below the falling wedge and key support.  Lower prices are now favored.  Falling $USD is supportive of precious metals and commodities.  

$SPY Daily

We are at the top of the range. A central premise of TA is that resistance is resistance unless or until broken.  Until price can break to new highs a gentle pullback is favored. That view may be proven wrong ( that is what stops are for ) but upside seems limited near turn.  If price breaks out, we will have a beautiful line to shoot against to the long side.  Trim and trail long positions.

Swing Traders.  No technical changes as we play the waiting game. Traders can remain long against the gap opening. What is needed now is a breakout for longs above $301.  Lots of bears will be wanting to fade $301 so expect a war there. I doubt it will waltz through unless a major news event pops it.

$SPY 60 minute chart

No changes. The levels remain in place as we bide time.

Bear Set up:   Objective, low-risk shorting locations are as follows. 1. A rejection near $301.  2. A break below Friday’s high at $298.75   3. A gap entry at  $297.10.  4. A gap entry at $296.25 5. A break of the 60min uptrend line.  Set a stop just above your entry when and if price heads lower.

Bull Set up:  Stay long against $298.75.  A pull back to that level that holds is a place to add to or open a new long.  A breakout above $301 is a place to add or open new longs.  Once price clears a level, that is your new stop. Moves back below to prior trading ranges are bearish.

$QQQ Daily

No changes here either.  Even though we were higher on the day, they were fading the open most of the day .  Holding Friday’s high  at $192.60 still seems important to my eye.  Closes below  Friday’s low at $190.80 are bearish and would likely mark the beginning of a short term reversal to fill the lower gap which would fill at $188.68.

To move the needle on the upside, bulls need an impulsive move above a resistance zone at $194 – $194.50

QQQ 60 min

Price has been working higher within the upper half of the uptrend channel ( in brown ) A drop below the mid-point of the channel would likely result in a quick move to the lower channel trend line.  From there, any break of the lower channel line would favor a deeper pull back.

Bear Set up:   Shorting locations.  1. A rejection of new highs near $194. – $194.50    2.. A drop below $192.60  3. A gap entry at $191.65 4. A gap entry at $190.80

Bull Set up:  As long as price holds Friday’s high at $192.60 traders can stay long and look for a breakout above $194..  A break above $194 with a hold would be a place to add or start a new long position. Become cautious on a break below 192.60 and especially concerned with a break below $190.80

$IWM  Daily –

Folks, I have to say, if you’ve been following the game plan here, and executing your trades, you’ve got to be pretty pleased. The 60 min chart and the associated levels have all been working according to Hoyle.  Moving level to level.

If you’ve been long, move your stops up to $152.  That is your new pivot with the OH target being $154.25.   A move above $154 targets $156.50.   If you are not long, you’re first objective entry point is either on a pull back to $152 that holds or on a break above $154.

$IWM 60 minute

Bear Set up:  Rejections at $154.25, a drop below $152,  or a subsequent drop below Friday’s low at $149.79 would be bearish developments and would favor a move to fill the gap to $147.72.   That said, the indicators suggest you should be looking for bullish set ups.

Bull Set up:  As mentioned, buy any pullback to $152 that hold, otherwise, maintain a bullish posture and look for a breakout above $154.25.  That is your gateway price for the next target level at $156.50.  The indicators on the daily chart are supportive of higher prices and trump wiggles on the 60min indicators.  My only concern on the long side is the steepness of the trend line.  A 45 deg angle is sustainable, but this trend is steeper than that.  I would be booking some profits if that uptrend line is broken

**************************  TRADES **********************************

Trade set ups

Leaving the Oppenheimer list up another day for those that missed it.

Oppenheimer’s Top 33 Picks  ( A contribution from Paul in the group )

Each analyst was asked to provide their top pick within their coverage universe. The names presented, in the opinion of the analyst, are the best combination of fundamentals and positioning in their market space. I have not looked at the charts of these picks and are not endorsed by me.  It is simply fresh info from a top Wall Street firm.   Below the list, I ran a 3 week relative rotation study. Because there are so many names in the list, the graph is crowded. The table let’s you know which quadrant each stock is in.

ROKU,SAP,AMRC,GPN,NBIX,ITT,UNH,DPZ,GBT,AME,NBL,CME,SGEN,

TRHC,AYX,SYF,BHVN,CRWD,TNDM,WSC,ADMA,JEF,RUN,SERV,

CTRP, CMCSA,LOW,VCEL,LPSN,CHD,TTWO,MRVL

$GDX Daily Gold Miners:  Nice bounce off support yesterday as mentioned above.

$DOV  This industrial name got a nice pop yesterday.  With a bit of follow through there will be a nice line to shoot against on the long side.

$EL Daily.  Seems like a legit move into the $10 gap, but stock has had a couple of recent head fake moves to frustrate traders. Let’s see if this is the real deal.  It was a very interesting day.  EL got an upgrade with a PT of $230.  After an initial pop, they fade it the whole day.

$BYND Daily  –  Guys in the trading room brought this to my attention.  Although the chart scaling makes it hard to see, there is still a good part of the gap to fill. A break below the bottom side of the gap may be the beginning of the end for this volatile name.   Note how the volume has dried up.

$BURL      Price did not like the top of the box at resistance.  As price moves away from $205 to the downside, objective locations to get in diminish. When you see or I present a tight set up at an objective low-risk location, it only stays low risk for a brief moment.  As price moves away from the location, the trade risk rises.   Whan you see the set up, quickly decide your strategy whether it be buy , sell, or pass.

 

Electronic Gaming 5 Week Relative Rotation.

When I looked at the charts , the $EA Weekly is in the midst of a sizeable Bollinger Band squeeze as volatility compresses.  When the vol inevitably expands, I think we will see an out-sized move in the name. If interested, I’d alarm the hi-side and low-side of the range. Then wait for the trip wire to trigger. I am going to do that on my end.

 

 

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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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