Tickers discussed: SPY, QQQ, IWM, TLT, USO, GLD, GDX, TM, KSU, EL,MDB, PGR,SBUX, BOOT
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.
A light week of earnings, but I will be watching $FDX and $ADBE in particular.
Market Observations, Technical Developments, Outlook, and Strategy
Market Recap: Friday’s quiet action seems like a distant memory as Saudi Oil capacity is disrupted by drone attacks over the weekend. Brent Crude jumped by the highest single day percentage on record but has backed off since futures opened last night. All the major indexes are down about 1/2% as safe havens return to favor. Gold is up 1/2%, Silver up 2% and TLT up about $2.
The Risk Off events come at a good time for safe havens as all of them had fallen to key support and were threatening to breakdown. Time will tell if the bounce sticks. It wont be until after the FOMC’s rate announcement on Wednesday will we know for sure.
Watch for all the oil-sensitive names to move this morning. Travel stocks and airlines will likely be down while energy producing names will be higher. Nimble, active traders can focus on these names to fade over-bought conditions and buy over-sold conditions. They’ve already faded the oil move significantly in futures. That trend may continue. Stay active, flexible and know your levels if you decide to jump in.
Traders are encouraged to review positions and exposure ahead of the FOMC announcement. Treat the FOMC rate decision as an earnings event where you have no edge. I’d discourage adding exposure ahead of the meeting; trim any positions where you have nice profits that you don’t want to see evaporate.
Hong Kong News: The London Stock Exchange dismisses HK Exchange’s takeover plans. Meanwhile Molotov cocktails, pepper spray, water cannons, and rubber bullets describe another weekend in HK as protesters roll through their 15th week of protests.
China News: Industrial Output slowed to 4.4%, the lowest in 17.5 years.
Currency News: YEN, Canadian Dollar and Krona spike on oil disruption
Bonds. Price is set to open at / near $138.50 which would put it between the T1 and T2 levels shown below. The levels have been spot on during the recent downtrend. Continue to use them to trade in and around. Keep in mind the FOMC rate decision will likely move the needle here. Be careful holding through Wednesday’s announcement.
Gold : $GLD is at support and offers a good trade location for a move higher. Use $1500 as a bull / bear pivot in the price of the metal. Above $1500 is ok for longs, below more iffy.
$GDX Bad day at the office for $GDX. A big bearish engulfing candle favors a move to support at $26.25. Set your sights at that level both if you’re a bull or a bear. Critical spot
$WTIC / $USO Usually the 60min chart is in focus on USO but today we’ll need to take a wider view of prices as USO is set to open around $12.50. Over the coming days we’ll have to monitor if a new risk-premium is priced into the market or if this is a pop to fade.
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: Bulls in control
Although prices will likely be down today, bulls still in control. Taking a cautious view ahead of the FOMC; plan to mostly be a spectator. Selectively looking for promising set ups but am in no hurry ahead of FOMC rate decisions. Slow and steady wins the race. If we are going to new highs and a new leg higher, there will be plenty of time to make money on the long side.
Risk off trades firming: Interesting that Gold and Silver stopped going down and have made small advances in the face of rising equity prices. TLT needs to stabilize. Too early to call a bottom, but seems like a change of character.
Price is set to open around $299.75. To my eye $301, $299, $297, and $294 are the 4 key locations. Bigger picture, prices above $294 keep price above the breakout and are generally bullish. THe upside target for this move is $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: watch for a break of the rising wedge. Really the key level is $297. On a break below $297, get short for a gap fill to $294.
SPY 60 min: Nimble traders can use $301, $299, $297 and $294 as key levels to trade in and around. Price should react as each level of downside support is tested. To my eye prices below $299 and things may get iffy for bulls. Below $299, bears can get short and look for $297 then $294 as downside targets.
Price continues to flirt with the prior highs. Traders should remain aware of the bearish divergences that are present as price reaches the old high but with lower indicator levels. Bearish divergence is not a sell signal. It requires a trigger which would be a break below the uptrend line.
Swing Traders: $191 is a key level to hold in any pullback and should be regarded as a near term bull / bear pivot. A move below $189 would be very bearish. Any moves above the old high would be bullish.
QQQ 60 min:
$192.5 and $191.50 are support levels above $189 where the break out originally emerged from. Bigger picture, prices above $189 are bullish while a dip back below $189 would be bearish because it would indicate a failed breakout. Use the marked levels for reference when actively trading. Price is currently set to open around $191.25 which would put it below trend and vulnerable to further downside.
Price is at the top end of the range that has contained all price advances since 2019. That said if the “dash for trash” trade continues and yields continue to back up supporting regional banks, IWM may be poised to break out. That said, resistance is resistance until broken. Price has to prove it here with a breakout above $158.50 .
Swing Traders: Hopefully if you got long earlier last week you’ve participated in the upside move and have trimmed your position into key resistance. Now I favor a pull back at key resistance given that resistance has held all year. Price has to prove it now. Benefit of the doubt resides at resistance
IWM 60 min
Keep it simple and visual; $158.50 – $159 is key resistance and $156.50 is first support. Nimble , active traders can trade in an around these levels. Breaks below $156.50 would be bearish while a break above $159 may initiate a move that points to $170 as a measured move target.
************************** TRADES **********************************
Trade Ideas and Set ups
$TM Highlighted late last week; continues to work. A breakout to all-time highs sets up as a nice long against $132.5
$KSU Highlighted 2 weeks ago; continues to work
$PGR – Range break trade set up favors further downside below the 200ema
$BABA Alarm $179 / $180 area for breakout and run to $190 if market stays constructive.
$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.
$SBUX – Testing the downside support. $88 is key TL support. Either a great value buy at that location if it holds or a short entry if it doesnt.
$EL – Testing gap support
$BOOT – Threatening to breakout
Triggered Trades – None
YUMC Oct 47.5 C at 1.96
QURE Oct $45 P at $3.61 –
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
Need More Trade Ideas?
Each week, I sift through hundreds of charts looking for compelling, objective trading opportunities and send them to members of our group. Why not join us? It’s FREE. Registration takes less than 1 minute HERE
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.
Join our Trading Tribe!!
Our group of aspiring traders are into active swing trading using technical analysis to find objective, high-probability, low-risk trades. Using these processes we’ve been fortunate to be winning; not perfect but winning. If that is appealing to you, join us! I’d like to think you’d benefit from the work. You’ll get premium content 6 times a week including a copy of my Daily Profit Compass, Weekend Profit Navigator, and Trades about to Happen along with other actionable content delivered directly to your mailbox.
Registration is simple and FREE Visit our homepage HERE