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.
Market Observations, Technical Developments, Outlook, and Strategy
Market Recap: IWM was off 0.50 % but SPY / QQQ were basically ended flat after a morning pop. A very docile session from an index point of view. Today is so called “quad witching” as equity and futures options expire and futures contracts roll to the December contract. Expect some added vol today and dont put it past the market maker’s efforts to “pin” price at “max pain”. Max pain is the strike at which most participants lose. They know that exact location and often have an uncanny ability to make price close near that strike. When trading options a good thing to remember is “market makers are paid to win”
STX may be one to watch for follow through. At their analyst day they communicated 2020 revenue and margin projections that was not received well.
China News: China representatives said to be roaming the heartland looking for Ag deals as talks proceed in DC.
Currency News: British Pound rallies as Euro leaders say Brexit deal still possible.
Bonds. Bonds at OH resistance and a critical spot. THe brear flag very much in play. Price needs to quickly drive higher to avoid a backslide. 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. I have a small position in TLT Oct 141 calls
$WTIC / $USO The volatility in oil is leaking out as price stabilizes around $12. Nothing changes on the chart. To my eye, above $12.10 is a long; below $12 is a short. 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 has wobbled but hasnt broken yet. Managing to hold 1500. $1492 is my line in the sand. I have been hung out to dry on my miners. Need gold to quickly move higher.
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 ) Price has stalled. THe week following the FOMC and options expiration often are defining week’s for near term price action.
Risk off trades wobble: TLT and metals are at support. A leg higher in equities would likely break these. Watching closely.
No technical changes. Near term, $299 is the gateway to lower prices while $301 and higher will open path to new highs.
Swing Traders: No changes as price oscillates in a narrow range. 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. Notice the divergent high and quick fade. 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.
No technical changes. Indecisive doji candle yesterday. 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:
The thing that should concern bulls is the both RSI and PPO momentum are heading out of town at the highs. 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.
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: Price closed below $156.5 which was an important support level. Now $155.50 is a support ledge; below it favors a move to $154.50
IWM 60 min
Keep it simple and visual; Below 155.50 favors a move to $154.50; below 154.50 favors a fast move to $152.50. Bulls need to reclaim $156.50 and the downtrend line to get back on track. Nimble , active traders can trade in an around these levels.
************************** TRADES **********************************
A fresh set of trade ideas can be found HERE
Not official trades but both BABA and DHR broke above key resistance.
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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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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