Daily Profit Compass Sep 14

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Tickers discussed: SPY QQQ IWM GLD SLV GDX 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 

Self-confidence coupled with a calm mind are not only a recipe for good relations with others, those traits are also a recipe for successful trading. By whatever means possible, take pro-active measures to calm your mind.  Ideas could include…

  • Hide your P&L; trade the chart and your P&L will take care of itself
  • Unplug the TV.  Financial media will not help you and quite often introduces voices that run counter to your process.
  • Dial up the Twitter and Facebook filters. These can be huge sources of noise
  • Upgrade your friends. Dump the haters and those that do not support or aid in your efforts.
  • Journal.  It doesnt have to be fancy. Simply jot down your thoughts and feelings during the day. After a couple of weeks, patterns will emerge
  • Focus on a process that is simple and repeatable, then EXECUTE.  This will bolster you confidence.

Earnings

News Flow

  • Oracle selected to be TikTok’s “Trusted Technical Partner” but details are fuzzy
  • $GILD to buy $IMMU for $21B to bolster it’s cancer therapies
  • $NVDA to buy ARM holdings from Softbank for $40B
  • M&A drives pop in equity futures.
  • AMZN set to hire 100,000 in US and Canada.
  • Pelosi welcomes House back to session and last chance for a stimulus deal.

Revisiting Gold, Silver and the Miners

The precious metals have been frustrating over the past several weeks for those that have been anticipating and have been positioned for a pop. While no bearish technical events have occurred, their collective momentum has stalled.  Also, as equities sold off, they did not act as safe havens. I think the key now is to be patient and focus on the PPO momentum profiles.  Once the PPO’s put in bull crosses the stage will be set for a durable move higher.  Remember, we have the Fed meeting this week. Powell could certainly make comments that will get gold off the dime and get moving. I am bullish the precious metals and I think ultimately this consolidation is healthy. Let’s be patient and be ready to go once we get the signal. 

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 boldly green.  Keep these key thoughts in mind.

  • We will open with a BIG 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 below Fridays close or worse, below Friday’s lows, it would be very bearish.
  • Volatility is back.  This will go in both directions.

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.

 

Active Trade set ups / Positions

For the sake of space, I’ve removed the trade / activity. If you want to look at it, simply look at prior blog posts.

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Sept 14   Depending on how the first part of the day goes, I may be forced to exit my 2 small shorts if it looks like the strong opening sticks.

Sept 11   Took a small short on QQQ and IWM home over the weekend.

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.

 

 Index Charts

SPY 30 min

$QQQ 30 min

$IWM 30 min

 

 

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