Tickers discussed: SPY, QQQ, IWM, TLT, USO, GLD, SLV, NEWR, MDB
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
Market Observations, Technical Developments, Outlook, and Strategy
Market Recap: Before diving into the Markets, a reminder that today marks the anniversary of the 9/11 attacks. There is and are many folks still dealing with pain and loss associated with this tragedy. Take a moment and send them an encouraging prayer or thought today. They’ll appreciate it.
Yesterday, QQQ can in for a perfect back test of the breakout when price dipped down to tag $189 before bouncing nicely into the close. This is exactly what you want to see if you’re bullish. SPY on the other hand never even came close. A back touch for SPY would be a tag of $294. IWM had another $2 advance ( $4 over 2 days ) and outperformed SPY / QQQ. The “IWM long against $150 ” trade advised right here has been a “magic eraser” trade for those that took it. Magic eraser trades are those trades that quickly erase bunches of trading boo- boos in a single swipe. Kudo’s if you jumped in.
One thing that is perplexing is for the second session high-flyers have been whacked while the junk names of the market surge. One example: So they nail $MCD by 3% which is fine; mean while $MIK Micheal’s hobby store that had sold down to $5 doubles in 4 days on zero news. Dozens of examples like this. Short covering?
Prices have remained pinned below the highs made last Thursday in SPY / QQQ.. Certainly not bearish, but not exactly bullish either….more of a digestion / pause as market possibly looks ahead to ECB / FOMC policy decisions. Traders are encouraged to maintain a bullish bias as long as price remains above the breakout levels from last week. Only a return to the previous trading range turns the charts decidedly bearish. On a measured move basis, the target for SPY is $302 and for QQQ is $199.
Hong Kong News: The HK Stock exchanges makes a bid to buyout the London Stock Exchange.
China News: Reducing / eliminating some tariffs as good will gesture ahead of trade talks. Tariffs remain on Ag products.
Currency News: Aside from the hourly wobbles of Pound Sterling tied to Brexit debates, global FX is quiet.
SAFE HAVENS
Bonds. $TLT gave us a nice $2 move as price lost support at $143 and fell to the next level of support at $141. The next target, should $141 break, is $139.50. We had TLT on the triggered trade list; Kudos to you if you got short against $143 on the breakdown. Watch for reversals / bounces at these support locations.
Gold : GLD lost key support at $140.50 and is now technically vulnerable to further pull backs. First test comes on a tag of the 50ema at $138.50. If that fails, a move to $136 is favored.
Trade Idea: If you got short on the break of $140.50, stay short with a stop slightly above. T1 = 50ema / $138.50. T2= $136 Trade via either $GLD puts or 3x short gold ETF DGLD.
Silver : Nothing day for silver, so no changes. Solid support comes in at $16.25. Notice the large volume / price bars at that location. There is also trend line support coming in at that location.
Trade Idea: If price reaches $16.25 get long Silver ( SLV ) or silver miners ( $SIL ) with a stop just below. This would also be a location to add to any pre-existing long position if you wanted to increase your exposure
$WTIC / $USO Bolton’s dismissal gave oil a downside jolt, but by session’s end, things stabilized. $12 remains the bull / bear toggle.
Trade Idea: Use $12 as a bull / bear pivot location. If price breaks above, get long. Price targets above.
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 )
Strategy Update: Time to re-assess the market.
Still watching carefully to see if the breakout holds. Although I have added a long position or two, not piling into bullish positions at this time. If the breakout is legit and prices go higher, I am fine paying higher prices. If the breakout is legit there will be plenty of time to add long exposure.
Risk off trades begin to crack. I still have exposure to Gold and Silver miners which may prove to be a mistake; stops quickly being approached. If Bonds / Precious metals continue to sell off, it would be supportive of higher equity prices.
$SPY Daily
No technical changes as price continues to hold the breakout and trades within a narrow range. Upside targets are $301 then $306.
Swing Traders: Stay long against $297 with an eye on T1 at $301. Below $297 and especially $296.20 things get iffy with a huge gap all the way down to $294. Bears: On a break below $297, get short for a gap fill to $294. All bets are off if $294 breaks as it would signal a failed move which is very bearish.
SPY 60 min: Price took a look into the gap but found support at $196.22. Traders can be long above $299 and Short below $297 and / or $296.20. The trading range is wide enough for nimble day traders to profitably trade inside the range by selling resistance and buying support.
$QQQ Daily
Price had a perfect back test of $189, then had a nice bounce into the close. This is bullish action. That said, many of the market leading names in tech have either been weak or downright bearish over the past couple of day. It will be tough for QQQ to advance or even maintain unless the price action in the top names quickly shape up.
Swing Traders: Stay long against $189 and look for a breakout to make a run at old highs. Bears; you need a sustained move below $189 and back in the prior trading range.
QQQ 60 min:
The trading range has expanded to $189 – $192. Above $192 targets old highs. Below $189 favors a move to the low end of the prior trading range. Between $189 – $192 expect chop.
$IWM Daily
A sweet $4 2-day advance brings price just shy of $154. While further gains are certainly possible, the going gets much tougher with OH resistance coming in. If you’re long and want to stay long, consider trimming n trailing stops on a portion of your position. .
Swing Traders: the next target is $154.50 , then $156.50. Watch out for rejections at OH resistance locations.
IWM 60 min
Keep it simple and visual; use the support and resistance levels to trade level to level. Further upside is possible but likely needs support from a nice advance in SPY / QQQ to make it happen. Bears: the chart is bullish. Watch for trendline breaks or rejections at key levels before launching a short position. No downside catalyst so far. Respect the technical levels.
************************** TRADES **********************************
Open Trade Set ups
$NEWR – get short on a bearish continuation move below $54.83
TLT – Use $141 as a bull / bear short term pivot. See above for details.
$MDB Set an alarm at $125 for a $20 Gap fill opportunity. Target the $125 or $120 strike at least 2 weeks out after the alarm triggers.
Trade Ideas:
KSU long on weekly breakout to 5yr highs – working as price advances
EDU long on a weekly breakout to multi year highs. – working, holding breakout
Triggered Trades
In and out of ULTA short for a loss.
TLT nice win on a breakdown from $143 to $141.
IWM long against $150 for a $4 win
Open Positions
QURE Oct $45 P at $3.61 – Bearish continuation breakdown
OLLI Oct 62.5 C at $2.29 for gap fill
GDX Oct 30 C at $1.47
WPM Oct 30 C at $1.32
KL Sept 45 C
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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