Tickers discussed: SPY, QQQ, IWM, TLT, USO, GLD, SLV, OLLI, ALLK, PD, GS, DIS, VIX, CVNA, CVX
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
Light week for earnings. $DPZ and $LEVI report this morning
Market Observations, Technical Developments, Outlook, and Strategy
Market Recap: Despite a strong start to the day and help by an early afternoon “fake news” tweet, the indexes finished poorly and failed to build on Friday’s strong close. As you’ll see in the charts below, the rejection in price came perfectly at resistance. This morning as I write this, futures for /ES are off 15, so if that ends up even close to where we open, we’ll be below 293 and pushing 292. There is a gap in SPY between 291-290 so be aware of that if we plumb lower levels. There is also a $1 gap on QQQ at $187.
We are in the August “Vol Box” so expected added volatility. Aside from price location, expect fake as well as legit tweets to roil price action through Friday. Try to resist the FOMO urge when you see this stuff. Top tick chasers yesterday were fried. Try to sit patiently through those events.
Safe havens were flat to down as bond yields ticked higher and the precious metals remain in consolidation mode. Oil ripped early in the session and was up about $1.25 before giving it all back.
The Oscillators backed off their oversold condition so from that standpoint, more downside is available if price wants to go there. I remain bearishly positioned but it has not been particularly comfortable.
S&P Leaders
S&P Laggards
Hong Kong News: HK exchanges drops bid for London Stock exchange. Radical element of HK protest movement increase vandalism and general chaos in city. I was thinking how in the world can WYNN / LVS / MLCO post good earnings results when tourism has dropped to record levels? In the last earnings period, the demonstrations were only a few weeks along. Now its been in excess of 4 months. Might be intriguing to take a small shot on one of these names through earnings.
China News: China rebukes NBA after tweet from Houston Rockets GM apparently supporting HK protests. 8 tech companies added to US Blacklist. China said expect retaliatory measures. Markets re-open after fall festival concludesclosed
Currency News: Quiet
SAFE HAVENS
Bonds. A little pull back under $146 resistance.
I am long TLT oct 143 Calls.
$WTIC / $USO Price put in a potential fake breakout; Now the path is open to re-test the lows. A break below $50 on $WTIC would open the door for a test of $42. In trading, I tried a long on USO, was stopped out, then bought USO Oct $11P …may be further downside.
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 Gold remains in a down channel; bulls need a break of the downtrend for a buy signal.
$SLV Price continues to hold $16.25 support but needs a break higher from the channel to spark added interest.
$VIX
Learned a lesson last week. If you’re long vol and you get a spike, either take profits or spread your position. I had a chance for a nice exit and hesistated; then the gains disappeared fast. THat said, price holding daily uptrend and is up another $1 this morning.
LONG VIX October 16 $17 Calls
Strategy Update:
Holding existing shorts but will likely not be adding much in the way of short exposure ahead of trade talk results.
ETF Mode
As you likely know, I dont typically hold individual stocks through earnings where there is no edge. Instead, I go into ETF mode as a way to play earnings for sectors. It eliminates single stock risk but allows for participating in sector moves. For instance, $KRE or $KBE for bank earnings. There is an ETF for everything. Choose ones that are liquid with tight option spreads
Risk off trades : Should benefit while equities wobble.
$SPY
Swing Traders: For significant downside to open up, price needs to fall back below the uptrend line on the daily. Use $293 as a pivot point today. Below favors bears; above gets more iffy.
SPY 60 min: Prices below $293 keep door open to lower prices making it the short term bull / bear pivot. I am looking for a gap fill near $290 as a first objective over the next couple of days. A break above the downtrend line is bullish and would force a lot of shorts to cover.
$QQQ Daily
Swing Traders: Return to a bearish bias. Below $188 and price is open to go lower. If price recovers the daily uptrend line it would be bullish and force a re-think.
QQQ 60 min:
Price got rejected right where it was “supposed to” and now has fallen back below the Downtrend line which is bearish. A break below $188 should send this lower. Note the open gap at $187 to $186. Expect a minor reaction at $187 before making an entry to fill that gap. A break back above the TL would be a bullish event. $188 is the bull / bear pivot for today.
$IWM Daily
For intermediate to long term, Stay bearish; nothing in chart to suggest any change is imminent
Swing Traders: Use $148 as your pivot. Below $148 puts price below the uptrend line and open for a run to $146; below $146 opens door to retest lows.6 likely takes price to $144.50.
IWM 60 min
Price reversed just shy of my $150.50 target and subsequently broke the 60m uptrend line. Nimble traders can stay short against the uptrend line. THe up move filled the open gap and therefore no unfinished business above. Price now has no reason to back track. Maintain a bearish bias even when playing bounces. The trend is down.
************************** TRADES **********************************
Trade set ups
$CVX Broke down and had a bear flag back touch of broken support which is a classic move. Price rejected yesterday. Measured move target is ugly. A short against $114 w/ a stop just above is the trade. Earnings Nov 1
CVNA Price inside a $12 gap with a ways to go for a fill. Put in a bear flag and now is beginning to break down. Although the 200ema will probably offer some resistance, I think this ultimately fills the gap and returns to support.
$PD Breaking lower from consolidation box. Headed lower. I own PD NOV 25P at $2.05 which is beginning to work
$OLLI – we got smacked down on a long try a few weeks ago, now price threatening to make a big leg lower. $54 is key support. Alarm it. A break below is a sell signal.
DIS – This is chart from other day; keep on your radar. Topping structure and big gap below. Prices below the 200ema open the door to a possible gap fill. Earnings in 4 weeks
GS – keep an alarm on $195 for a break below and a big downside prjected move.
$ALLK Found this random chart of a company i never heard of, but i like the set up. Lots of put buying yesterday. Massive gap to fill. Might be worth a lotto ticket. Keeping an eye on.
Open Positions
VIX October 16th 17 C
SBUX Oct 89 / 84 Put spread at $1.50
XLE Oct 59.5 P at 1.23 banked 163% and rolled to Oct 56P
XBI oct 77p at 2.12
TLT oct 143 C at 2.15
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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