Tickers discussed: SPY QQQ IWM FISV Strategy & Tactic update
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.
Trader’s Couch
Positive Thinking; then decisive action
Yes, I agree with Anthony and will add that once either a positive feedback loop ( “trading in the zone”) or a negative feedback loop ( doom loop ) is in place it’s hard to extract yourself from it. If you’re in a downward spiral fed by negative thinking, switching to positive thinking is an important first step. But the key is what are you going to do? Only Action will cure fear or whatever is causing the nose dive. Change does not happen until we change something we do everyday. Revisit your process from top to bottom. See if there is anything that changed. Is your negative thinking being fed by a process error or an execution error? Even something like software can get digitally corrupted over time and needs an over-write to restore it. Junk can creep into your process or your execution. Stay positive. Search for the glitch and correct it. THen look forward to better trading.
BTW – Anthony Crudele hosts the “Futures Radio Show” and was a former pit trader. The show has worthwhile insights for traders. Check him out
Companion Video
12 min Video details our Active trader game plan for today focused on the indexes.
Added commentary on how to handle the gap open and scenarios for the Friday close.
Earnings
News Flow
- Quiet News Flow day
- Trump and Biden go to PA to commemorate 9-11
- $VRM and $ITCI announce secondaries to monetize the recent run up. More to come from these smaller growthy companies.
Technical Scan
Paul, a member of the team, contributed this technical scan to share with the group. Many thanks.
Strategy & Tactics –
With a series of lower highs and trend line violations, all the indexes and multiple FAAMG are on their first daily sell signals since their March lows. At a minimum, that informs us something is different and to take action. Although we are looking for another leg down, it is far from a given. What is required is a break of the prior lows which have been tested in many cases 3 times.
Today futures are green. Keep these key thoughts in mind.
- We will open with a gap below price if the futures hold. Be ready for a gap fill.
- Be open minded about having a bold green day. If price recaptures levels from below it is bullish. THe levels are clearly marked.
- If you’re a swing trader, ignore intra day noise and remain focused on the fact that we are on sell signals across the board.
- If we break yesterdays lows we head lower.
- If we get a deep sell off, bad selling rarely ends on a Friday.
- Closing price at yesterday’s closing price would keep the masses guessing over the weekend. THis may be the most probable outcome for today.
- Be open to all possibilities today and dont latch on to the degree you block out other possibilities.
Things to Do
- Begin hunting for stocks you want to BUY for long term holdings and at what price. Elevated vol would offer a great chance to sell naked puts on stocks you want to OWN. This is pre-work to have your ducks in a row for when we see stability return. Be patient; be ready
- Go tactical here. This is active trader wheelhouse zone with big intraday swings in both directions. If this is not your cup of tea, set up for Swing positions on the short side that you can hold for several days.
- FAAMG – Remain the directional key to market. Market goes no where unless big cap tech fades.
- Remain Fluid and flexible in both positions and thinking; Dont lock in on Narratives.
Charts in the Spotlight
$FISV
Payment processor FiServ has been frankly stuck in the mud for a while and has not materially participated in the recent rally. Interestingly, that has not stopped at leeast one institution from building a monster position looking out to the March 100 calls. Currently priced at about $9 each, they are not cheap. Over the past month, a massive 32,000 contracts have been accumulated. They come in every few days and buy a couple thousand in a block. The name deserves to be on one of your watch lists. Price currently is at the low end of value at support. I am not willing to put money out 6 mo right here right now. But these guys are no dummies. I intend on keeping a close eye on it and you should too.
Active Trade set ups / Positions
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Sept 9 / Sep 10. Long the indexes ( QQQ for me ) for gap fill bounce and then flipping to short heading into Friday
Sept 8 Activity – Covered QQQ short lottery tickets from Friday near $270. Looking for either a gap fill higher or a bounce to fade.
Sept 4 Activity
Discussed optionality of taking lotto shorts into the weekend after anticipating a run of the mill fib / short covering bounce into the close. Bad selling never ends on a Friday.
Sept 3 Activity
Went flat on broad market weakness. Taking losses on short term long positions and stepping aside for more evidence of sell signals or one day event.
Sept 2 Activity
AAPL / NFLX – The decision to hold overnight looked very smart indeed at 9.29am but at 9.31 not so much as they flushed the open. We took our losses and exited. Net / net, both plays were profitable with NFLX still garnering a sweet win but the give back hurt.
TWTR – Sept 41 Calls. A big pop gave us the opportunity to book 110% profit and roll higher. I bought the Sept 44 / 47 call spread for 1.03
DRI – Into the close I bought DRI Sept 95 calls looking for a pop into a big volume / price void.
INTC – Bought Sept 11 52 calls as price moved into a huge gap and with institutions piling in with massive amounts of call buying. These need to move fast with only 10 days until expiration.
Sept 1
AAPL / NFLX weekly calls. After booking a big win in NFLX and a 60% win on AAPL. We rolled higher with ATM calls and decided to hold overnight
Aug 31 Activity.
Bought AAPL Sept 4 $130 calls at $3. Unofficial trade idea.
Aug 28 Activity
$CHEF – Opened a new long position via September $17.50 calls at 80cents following a technical breakout, 5x call buying with institutional support
LVS – opened a new position in Sept 52.50 calls at $2.47. The gaming space has seen a marked pick up in institutional call buying in recent days.
$V – Price broke to a new high over 212.50. Perfect time to roll our Sept 202.50 calls to Sept $215 calls @ $4.80. Booking profits, staying long long against the prior high at $212.50
$DNKN – Rolled Sept 72.50 calls to Sept 77.50 / 82.5 call spread at $1.45. Booking profits and staying long
Aug 27
EBAY / CHWY – closed longs. EBAY simply never performed; CHWY hit our stop right out of the gate.
NIO – closed out longs after a nice win.
Aug 26 Activity
CHWY – Bought Sept 60 Calls at $3.74 Ahead of earnings on Sept 10 and following institutional call buying.
NIO – trade management. Rolled out of deep in the money calls to book a massive win and re-positioned in Sept 4 21 calls but with fewer contracts as the measured move target of $21 was tagged. Noted that unlike yesterday, Put buyers were making their presence felt. Price has not given any sell signs yet, but in a volatile name like this, that can happen in 15 min.
AUG 25 Activity
NIO – Bought on breakout above $16.
PINS – Stopped for 30% loss. Nice idea, wrong result.
Aug 24 Activity:
TWTR – Opened Sept 41 C for $1.73 on breakout
PINS – Opened Sept 32.5 puts at $1.83 on a breakdown from a consolidation range and into a wide open gap.
Aug 20 Activity:
XRT- Extreme bearish order flow has again picked up with big players shooting against our long position. In the face of soggy retail numbers and the bearish order flow we closed the Sept 50 Calls for $3.05
$V Rolled stops to breakeven
Aug 19 Activity:
Trade Idea to get long $V at the money Sept Calls against $200.
Aug 13 Activity
$XRT – Sept 50 C ; Closed 1/2 of position. Entered Aug 5 at 1.90; closed at 2.90. On the other 1/2 of position sold Sept 53 C for $1.20 credit. These moves were prompted by extreme bearish order flow into the Aug 28 exp $51 puts over 15,000 x. Retail Sales and Retailer earnings forthcoming.
EBAY Opened Sept 60 calls. $1.23. Looking for a move back to the highs
$IBB Closed short position for a small loss.
Aug 12 Activity
$INTC I finally gave up on this short. More a time thing than price hurting. Closed Sept 47.50 Puts for about a 30% loss.
$GLD Re-entered short with Aug $180 puts. Needs to move rather quickly, if it does not, will need to exit or buy more time.
Aug 11 Activity
$IBB – opened Aug $132P $2.32
$MNST – opened Aug 80P looking for gap fill coming out of bracket low. $1.02
$CF – Taking a shot at Sept 40 C at 45c. after players hit that strike 2600x ++
$DNKN – opened Sept 72.5 C looking for a breakout ahead of earnings after the Sept options expiration.
$GLD Closed puts for massive 340% win. looking to re-enter;
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$UUP – Initiated Sept UUP Sept 25.50 calls Aug 3 looks like a fail. Will post if i exit
Index Charts
SPY 30 min
$QQQ 30 min
$IWM 30 min
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