Daily Profit Compass September 30

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Tickers discussed:  SPY, QQQ, IWM, TLT, USO, GLD, SLV, AAPL, AMD, SBUX IHI, FTNT,  GH

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

Costco on Thursday highlights a slow week of earnings.

Market Observations, Technical Developments, Outlook,  and Strategy

Market Recap:   Friday was a volatile day driven by multiple headlines the worst of which came in afternoon trade where government officials were quoted as saying the US was considering a ban on US listings for Chinese companies.

The safe havens continue to be wobbly showing that bulls maybe gaining upper hand but the VIX has been climbing over the past 4 sessions and seems poised to break out. Check mark for the bears.

The trading environment will likely continue to be choppy with news flow being the dominant factor until earning season really kicks in.

 

S&P Leaders

S&P Laggards

Semis battered with MU leading to downside after a poor earnings reaction.

Hong Kong News:    A savage weekend of demonstrations in HK  as protesters and police have some of the fiercest clashes seen over the past 4+months of protests.  This comes a day before the 70th Anniversary of Communist rule in China on October 1. The world will be watching closely to see what the protesters may have in store for this event.

China News:  Markets will be open today, but closed the rest of the week for Fall Festival .  Trade commentary may go dark this week from China as domestic activities take precedence.

Currency News:  The USD sits at 2 year highs and has shown little inclination to back off as its relentless bid extends both price and length of the rally.  Multi-nationals are sure to mention USD strength as a headwind when earnings begin being reported.

You will likely

 SAFE HAVENS

Safe Havens continue to wobble as Gold and Silver test key support with bonds pinned beneath first resistance.

Bonds.   Price in no man’s land between $141 and $143.  A break above $143 is bullish and a place to establish a long.  Bearish traders can short agianst $143 with a stop just above.

$WTIC / $USO  Price is consolidating in what looks to be a flat flag.  A break lower targets $11.10 but some support at $11.50 may hold up the show.

I closed my USO October 4  $12 puts on Friday for about a 45% gain.

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   Per the annotations, price is at support and a break below the 50 ema takes the chart bearish.  $1492 on futures is the last stop on this train. Bulls must make a stand there or lower prices are favored. 

$SLV    At key support. A break below $16.25 turns the chart bearish. Bulls need to step in now.

$VIX

To my eye, the VIX is aligning for a moonshot with price closing above prior resistance 4 times. Closes above $18 accelerate the launch sequence.  RSI has broken out and PPO has put in a bull cross. The technical elements are aligning for higher prices.

Strategy Update:

Although I am bearishly positioned, the market remains a jump ball between bears and bulls.  Although QQQ and IWM have weakened, SPY remains resilient by keeping price out of the August trading range.  Until SPY follows QQQ lower, bears are likely to remain frustrated.  Wobbly safe havens are not helping the bear case either.  The Bulls are likely to be frustrated as well.  FAAMG names are weak and unless you’re loaded with XLU and XLP names you have not had much to go on for a while.  Bulls need a breakout to re-ignite the long side. Until then, the chop-fest will likely continue.

Risk off trades :   Wobbly at best; threaten to break down.

$SPY

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:  Price closed below the uptrend line off the August lows. A kick back rally to the downtrend line would give an objective location to try a short. A break above the downtrend line would likely spark a bigger rally and would be the earliest location that bulls could confidently anchor a long.

 

$QQQ Daily

So you think trend lines don’t matter?  Look how they closed price on Friday after a look below. Right on the trend line and thus averting a downright sell signal.

Swing Traders:    A close below the uptrend line off the June low triggers a sell signal. On a break above $188.50 would be bullish and a place to establish a long.  The indicators are weakening as PPO has put in a bear cross and RSI dipping below 50

QQQ 60 min:

The downtrend line has contained all the recent advances.  Until price breaks above traders should shoot to the downside until price proves it can take out the downtrend line. On a break above, get bullish with the down trend being your stop.

$IWM  Daily

Swing Traders:   The break and close below $152 was significant.  A back-test of $152 would be an objective place to locate a short position.  First target is $150.  A close above $152 would favor a move to $154.

IWM 60 min

There is a resistance band between $152 – $152.50. A back test of that area and / or a check to the downtrend line would be objective shorting locations. A break above the DT line would be bullish and likely spark a bigger rally.

**************************  TRADES **********************************

Triggered Trades

SBUX triggered a sell signal on break of major uptrend line.  We are in the Oct 89 / 84 P spread at 1.50

SMH broke back below $118.5 with open gaps below yet to be filled.

MDB broke into its $20 Gap below.

AMD broke below support with lower prices favored.

XLE triggered a sell signal on its false breakout. We are in the October 59.50 p spread

IHI triggered a sell after closing below its long term weekly trend line.

Trade Set ups

AAPL – on a break of $117 buy the Oct  $117P and look for a move to back test the breakout at $210 / $211 area.

$FTNT breaking below support is a short against $77

$CAR is again testing support; get short on a break of $47 and look to the prior lows as the target.

GH quietly off 30% yet breaking below support into a volume / price air pocket on the chart.

 

Open Positions

USO  October 4 $12 P – closed Friday at 45%

GLD oct 142 / 146 call spread at $1.25

QURE Oct $45 P at $3.61 –   Closed Friday at 43%

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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