Daily Profit Compass September 19

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Tickers discussed:  SPY, QQQ, IWM, TLT, USO, GLD

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.

Earnings Calendar

Market Observations, Technical Developments, Outlook,  and Strategy

Market Recap:  So after all the build up and hype, aside from some expected intra-day vol, the price action following the FOMC’s 25bps rate resulted in zero technical changes.  We are not out of the woods yet though. We have September monthly options expiration  tomorrow.  Options expiration and / or FOMC meetings often mark inflection points the following week.  We will know something more definitive next week.

S&P Leaders

S&P Laggards

Post – FOMC positioning

As of now, the FOMC reaction has been a nothing burger aside from noise as the broad market indexes closed nearly where they were pre-announcement.  Let’s see how the rest of the week plays out before making any grand bullish or bearish proclamations.  That said, as of now, bulls remain in control because no major support violations have occurred.

Hong Kong News:    Quiet.

China News:  China media saying the trade team is closing in on an interim trade deal with the US.  For lack of another descriptor, think soybean deal.

Currency News:   Quiet

 SAFE HAVENS

Bonds.   Bonds wobbled yesterday but they did not break.  Price is tracing out a bear flag on the hourly.  A price move below $139 looks like a short to my eye while a move above $141 looks like a solid long.  If you enter here, simply set your stop below.    I exited my long yesterday before the Fed; looking to re-enter long assuming $139.50 holds. 

 

$WTIC / $USO   To my eye, above $12.10 is a long; below $12 is a short.  Oil is up about $1 in the premarket.  Odds are the gap completely fills sooner rather than later but there may be yet another rally before then. THe nice thing is, the levels are well-defined.  Follow them from level to level.

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 )  

Gold    Gold did not like the FOMC announcement.  It too wobbled but did not break.  I am using  the levels on futures, ( /GC )  $1500 and $1492 as a band of support. Above ok; below favors more corrective  activity.

Strategy Update:   No Changes – Bulls in control

Bulls remain in control unless / until prices return to the consolidation area ( below $294 in SPY and below $189 on QQQ )  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 wobble:   TLT and metals are at support.  A leg higher in equities would likely break these.   Watching closely.

 

$SPY Daily

No technical changes.  The FOMC reaction was neutral.   Near term, $299 is the gateway to lower prices while $301 and higher will open path to new highs.

Swing Traders:    If you’re already long, 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 $299 then $297.  On a break below $297, get short for a gap fill to $294.

SPY 60 min:   No Technical Changes. 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.

$QQQ Daily

No technical changes.   There is a ledge of support at $191 and below is key support at $189.  A drop below $191 would favor another test of $189.  The FAAMG names remain fairly weak and need to get going if QQQ’s are going to have a material and durable advance.

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:

I’d get short below $191 and position for a possible move to $189.  Prices above $191 are short term bullish. 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.

$IWM  Daily

Price remains pinned under $158.  For me that is the bull / bear pivot for a longer term move.  A close above $158 would be a bullish development and would favor higher prices.  But until that happens, I favor a move lower.

Swing Traders:   $156.5 is an important support level. Yesterday, price took a deep look below that level but recaptured it by the close. Watch for a move below $156.5 and the downtrend line off the prior high. If price closes below both a sustained move lower is favored.

IWM 60 min – No Technical changes

 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 **********************************

 

Triggered Trades

Closed YUMC and OLLI before the FOMC per note sent out

Open Positions

GLD oct 142 / 146 call spread at $1.25

QURE Oct $45 P at $3.61 –

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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