Daily Profit Compass Sep 4

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Tickers discussed: SPY QQQ IWM   Key option order flows  Strategy & Tactics

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

We have 4 months left in 2020. Plenty of time to commit to making meaningful changes to your trading process. The long 3 day weekend is a great time for relaxation and reflection.  Remember, “thoughts are things”.   What you think about, you can make a reality. Conceive it, believe it, execute it.

Earnings

No earnings are scheduled for today

 

News Flow

  • Over night bounce in ES faded ahead of August NFP;  NQ futures off 1.4% premarket.
  • Research emerging that diabetes and obesity medications may fight Corona Virus

Notable Option Flows

  • No surprise here.  SPY / QQQ / IWM all saw bearish order flows
  • $DIS  Although net flows were bullish on more than 2x call volume.  THe 2 biggest trades were call sellers.   Jan 140 Calls sold 4000x and oct 2 137 calls sold 8000x.  A big call BUY did stand out.  June 125 in the money calls at  $20.40
  • $BAC  Saw steady action add day.   One trader positioned himself in the October 25 / 30 “call stupid” buying both legs 21,764 x
  • $XLP saw some unusual action with one trader targeting March 2021 $58 puts 30,000.  THis ETF usually only trades 2300 contracts a day. It’s possible this trader is hedging some massive divvy centric portfolio but these were expensive. He paid between 1.72 – 1.84.  Looks like a directional bet to me.
  • All FAAMG printed heavy bearish flows
  • NFLX was neutral
  • TSLA significant bearish flows

 

Labor Day Weekend Set up

Yesterday was a warning shot across the bow of risk appetite and likely knocked a little froth up the top, but we remain massively extended.  I favor some more coming out but the when and how far remain questions.

Although we don’t really need to decide how we want to be set up until this afternoon, if you’re an active trader who has lightened up overall exposure, why not enjoy the 3 day weekend and get recharged for the fall selling when volumes and energy returns to the market instead of worrying for 72 hours about the potential gap open ( either higher or lower ) on Tuesday that will hurt your position.  One of the delights of this business is to set your own hours and when to participate.  You have permission to take the weekend off.

If you’re holding portfolios with a lot of long exposure, I’d either take this morning bounce to lighten up positions with low conviction.  Put insurance just got expensive so that horse has probably left the barn.

Strategy & Tactics –

No significant daily sell signals so my posture is neutral. Going to let today and the weekend play out and let price choose a direction.

  • Existing positions – Sift positions to make sure your commitment is firm.  Close out loose longs.
  • Long and Short set ups.  This is a time to be setting up both long and short triggered trades. We want to be flexible and ready for either the bull or bear case to play out. When finding a stock, always alarm both sides. ( high side and low side of a trading range for instance )
  • 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.
  • Expecting a hi-vol summer with Covid and political headlines whipsawing markets

 

Active Trade set ups / Positions

++++++++++++++++++++++++++++++++++++++++++++++++++++

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;

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

$UUP – Initiated Sept UUP Sept 25.50 calls  Aug 3    looks like a fail. Will post if i exit

Companion Video

The Indexes, FAAMG, NFLX, TSLA and the SPDR Sectors

In case you missed it last night, here is a re-post.  Run the video at 1.25x to reduce runtime without degradation of quality.

$SPY 30 min

$QQQ 30 min

$IWM 30 min

 

 

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