Tickers discussed: SPY, QQQ, IWM, TLT, USO, GLD, SLV, AAPL, AMD, SBUX
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
KBH down slightly AH last night on earnings; Micron on Deck for tonight after the bell. Should be a decent read on $SMH
Market Observations, Technical Developments, Outlook, and Strategy
Market Recap: Yesterday was a day of dramatic moves. The $USD exploded to new highs, as bonds and precious metals collapsed with impulsive sell -offs a day after they were ripping. All this while equities staged a rally to regain much , but not all of Tuesday’s sell off as impeachment pressure eased a bit.
Market seems to exhibit signs of instability as sudden shifts in algo-driven asset allocation are churning at a faster pace and greater intensity. The multi-trillion dollar bond market is moving like a biotech. These moves aren’t driven by traditional fund flows by themselves. I think they are being driven by algo’s cycling risk on/ risk off at a faster pace and with larger amount of money. Right now you could make a cogent case for bonds being in a massive bubble or that a moonshot is close at hand with US rates headed to zero like the majority of the world. While no one knows for sure, the answer could be both.
In terms of equity vol, the $VIX has had 2 consecutive closes above OH resistance and may now be operating at an elevated as we wrap up September and head into October. I include the chart this morning.
Lastly IPO Peloton is set to open today under the ticker $PTON
S&P Leaders
S&P Laggards
Cell tower stocks SBAC, AMT and CCI all had tough days
Hong Kong News: Major property developers have suddenly found religion and now feel a need to help the wide swath of people that have been left behind in the HK economic miracle. Several developers are now pledging to give away valuable parcels of land for lower cost housing development. HK has the most expensive housing on the planet…far more expensive than NYC or even Tokyo
China News: The top 3 property developers are said to have $80B in bond maturities coming due between now and June 2020. Meanwhile soy and pork farmers are said to be receiving inquiries from Chines buyers.
Currency News: Quiet
SAFE HAVENS
Yesterday saw safe havens completely destroyed.
Bonds. Bonds impulsively sold off losing over $2 and falling to support at $141. I closed my position in October $144 C. for a manageable loss. Now with price near $141 it is again at a point of interest. A break of $141 sends price to $139.5. A hold of support at $141 keeps the rally alive. If going long or short, keep a tight stop on either side of $141.
$WTIC / $USO Price moved lower in Wednesday trade but cut losses into the close. I may have missed a golden opportunity to exit my short position but still hanging in there. You can see the downtrend line i havew drawn in. Price needs to stay below or i am out.
I am in the USO October 4 $12 puts .
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 )
$GLD About the only good to come out of the day was that $1502 support on gold futures held. The sell off negated the gains of the last few sessions.
$SLV Wednesday’s 4% sell off filled the gap from Mondays 4% advance. High velocity advances and rug pulls.
$VIX
Last 2 closes have been above resistance at $15.75. The next level to watch is $18
$UUP – US Dollar ETF
60 min view shows the big breakout from the bullish ascending triangle
2 year daily view shows just how powerful this Dollar run has been.
Strategy Update: Downside break foiled
Yesterday we wondered if there would be downside follow through. Well we did not get that, at least not yet. I’ve gone from favoring more downside to more of a jump ball set up. THe bears have not been able to do anything but neither have the bulls so we are back waiting for a move.
Risk off trades : With the collapse of the risk off trades, a check mark for the equity bulls.
$SPY
Bulls recaptured most of Tuesday’s decline. THere is still OH resistance to deal with but the bulls defended $295.50 well. We still have yet to fully test the original breakout
Daily
Swing Traders: $295.50 is the key level to watch. A move below targets the top of the August range at $292. You can see it better on the 60 min chart that a break above $298.50 or so would give the bulls a leg up while bears want to reject price there and send prices lower from there.
SPY 60 min: Key off the downtrend line. A break above is bullish and would open door to yet another run at the highs. A rejection of that trend line keeps bears hopes alive that they can drive price back toward $295.50 for another try at breaking price.
$QQQ Daily
Price has fallen below $189 which marked the original breakout from the August trading range. Therefore the breakout failed which is bearish. From a technical standpoint, the bottom of the August trading range is now the technical target down near $179. THe most influencing factor here are the FAAMG names and SPY. Down side moves will be throttled as long as SPY remains above $292.
FAAMG names very weak. Watch them for clues. e daily pivot at $190 and the 20ema again but as before those low side supports have held.
Swing Traders: On a break below $187.50 a move to $185 is favored. That would fill an open gap and it is where technical support resides.
QQQ 60 min:
Another clean, well defined trend line to shoot against. A break above is bullish while a rejection offers bears an opportunity to push price back into the August trading range below $189. I doubt price will go far in either direction without SPY being “in-sync”
$IWM Daily
A bounce off off support sent price up to a fairly significant resistance level.ish
Swing Traders: A break above $154.50 would open the door to a run at $155 / $156. $152 remains support; beneath $152 look for a move to $150Get short on a move below $152.50 and look for a move to $150- 150.50.
IWM 60 min
Price finds itself at the confluence of downtrend and lateral resistance in and around $154.25. This is an objective place to try a quick short but if price pops through resistance, cover and flip long with room to run above.
************************** TRADES **********************************
Triggered Trades
Lots of stuff almost immediately stopped out on the reversal.
Frustrating? Yes; Part of Trading? Yes
TLT Oct $144 calls – stopped; very glad i rolled $141 C higher
SMH – broke $118.50 I am in the Oct 11 $118P at $2.67 stopped out
IWM – In the October $153 Puts at $2.99 …………..stopped out
QQQ In the October $188 P at $3.53…..stopped out
AMZN tripped the alarm… In October 4 $1735 puts at $24.75………stopped out
AMD – Triggered, but then was stopped out.
Trade Set ups
AAPL – on a break of $117 buy the Oct 4 $117P and look for a move to back test the breakout at $210 / $211 area.
$SBUX – if you’ve been looking for a tight set up on $SBUX, here is your chance for a value buy at trend. Get long against the TL. If price breaks below, you are out. If you think there is 10-15% more upside to this bull market then this would be good. Even as just a trade, this is an objective, low-risk trade location if you honor your stop if/when trend breaks.
Open Positions
USO October 4 $12 P
GLD oct 142 / 146 call spread at $1.25
QURE Oct $45 P at $3.61 – Nice down move of 6% has brought out position to life.
GDX Oct 30 C at $1.47
WPM Oct 30 C at $1.32
KL Sept 45 C – expired
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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