Tickers discussed: SPY, QQQ, IWM, TLT, USO, GLD, SLV, MU, AAPL, SBUX XBI, XLE
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
Micron $MU had a negative response to its ER last night after the bell; down about 8%. Be keen to how SMH and individual semi names react. If they are unfazed, this will speak to underlying strength as bearish new is ignored. If the sector is generally down, will be a clue that market is actually paying attention to input.
Market Observations, Technical Developments, Outlook, and Strategy
Market Recap: Pretty quiet overall with no significant technical events being triggered. THe market opened down but then closed on the stronger side cutting the losses. IWM was the worst performed down over 1%. Although SPY and QQQ cut losses, the OH resistance was not taken out and remains in place. We will see if “risk free Friday” holds true to form again.
IPO Nitemares
Peloton $PTON had a disastrous first day of trading down some 11% as investors question the business model and money losing financials of the company
WeWork gets its credit rating cut deeper into junk status as all parties turn on the company’s outlook
Endeavor pulls its IPO slated for today as weak demand dimmed it’s hopes for a successful debut.
So many of the recent IPO’s are now trading well below their IPO price both big and small. UBER / LYFT / CHWY / WORK / JMIA and a dozen more
S&P Leaders
S&P Laggards
Hong Kong News: Quiet
China News: Trade delegation set to arrive in DC Oct 15
Currency News: Quiet
SAFE HAVENS
Yesterday saw safe havens completely destroyed.
Bonds. Price bounded off $141 but was unable to recapture $143. Below $143 maintain a bearish to neutral bias. Recapturing $143 and holding it would be a bullish technical event.
$WTIC / $USO Oil rebounded from being down over 1% in afternoon trade but has yet to test the downtrend resistance. Maintain a bearish bias while price remains below trend.
I took profits on my USO October 4 $12 puts at 45%. I am out.
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 Remains weak but still holding support above $1502. Last chance support = $1492.
$SLV Weak again. Price trapped between support and the broken uptrend line.
$VIX
Now 3 closes have been above resistance at $15.75. The next level to watch is $18.
$UUP – US Dollar ETF
The Dollar hit a 2 year high.
Strategy Update: Although we are still in a chop, I remain defensively positioned unless / until OH resistance is taken out.
Risk off trades : Neutral to weak.
$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
Although weak, price is still above the TL off the August low. As long as price holds TL support the advance is in tact. A break below the TL at around $187 would put price on the “wrong side” of the TL and thus favor lower prices.
Swing Traders: Use the TL off the August low as your bull / bear pivot. Bears should hold off any multl day / week positioning until a break of trend. Bulls ok as long as price holds trend.
QQQ 60 min:
The downtrend line has thus far capped the advance. If the bulls recapture $190 and hold it, it will largely negate the near-term bear look of the chart. A rejection at the downtrend line and a red close will maintain the bearish outlook short term. Use the levels to shoot against as price has been respecting the levels to a large degree.
Prices below $189 keep price back in the August trading range. THe longer price stays below $189 the more and more the breakout will appear to have failed. All the people who bought the breakout are losing money.
$IWM Daily
Swing Traders: For those with no position, you $152 as your bull / bear pivot. Long ok above $152, short below it. If you are short from higher levels, maintain bearish view. Nothing in charts to suggest bullishness with PPO rolling over and RSI weakening. Trail stops down to stay positive on a reversal. Add to shorts on a break of $152 and look for a move to $150- 150.50.
IWM 60 min
Bulls: Objective to BUY against $152 or on a breakout above $154.
Bears: Short against the DT line or $154 or on a break of $152
************************** TRADES **********************************
Triggered Trades
Closed $QURE for a 43% win. If you left runners, trail stops down and exit position for a win on a reversal.
Closed USO short for a 45% win.
Opened $XBI Oct 77p after price broke down and after big money traders piled into puts in anticipation of a gap fill on the chart at lower prices.
Opened XLE Oct $59.50 Puts after failed breakout and with price dropping back below the downtrend line. Target = $58 Stop = downtrend line
Trade Set ups
Keep the recent SMH set up that we were stopped out of in focus. The Micron miss last night may cast a negative pall over sector. A break of $118.50 would again put those unfilled gaps in play.
AAPL – Price grinding into the apex of the 60m triangle. A break higher is bullish; get long against $219.75. A move lower get short against 219.75. There is essentially no room left in the formation. I expect a decisive move soon.
$SBUX – No Changes; still above trend . 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.
MU – post earnings trade
This is a snap shot of MU in the premarket. If you are nimble and interested, if MU breaks the low of $44.78 it is a short. THe long side is a tougher trade. You’d have to use the bottom of the prior candle from where you enter as a stop. THis is all micro trading stuff. I will add MU to the gap list and then Monday we will have a range break set up with the low and high firmly established.
Open Positions
USO October 4 $12 P – closed
GLD oct 142 / 146 call spread at $1.25
QURE Oct $45 P at $3.61 – closed
GDX Oct 30 C at $1.47
WPM Oct 30 C at $1.32
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
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.
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
