Tickers discussed: SPY, QQQ, IWM, TLT, USO, GLD, SLV, OLLI, QURE
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.
Market Observations, Technical Developments, Outlook, and Strategy
Market Recap: Since breaking above the trading range on Thursday morning, both SPY and QQQ has traded in tight consolidation ranges. IWM remains stuck below key moving averages and OH resistance and has received minimal lift from the big moves in QQQ / SPY.
The ECB has a big policy meeting on Sept 12. It is widely expected that policy makers will do a combination of interest rate cuts and some type of QE program. We will have to see what effect this has on US Equities. Whatever the ECB decides to do will likely seep into the decision-making process of the FOMC as it too has a rate decision around the corner.
Traders are encouraged to have a bullish bias as long as price remains above the breakout levels from last week. Only a return to the previous trading range turns the charts decidedly bearish. On a measured move basis, the target for SPY is $302 and for QQQ is $199.
Hong Kong News: For a 14th consecutive week, protesters flooded the streets over the weekend although for the most part were peaceful. It was reported that HK Tourism dropped to the lowest level since the SARS epidemic scare in 2003
China News: Auto sales decline for the 14th out of 15 months
Currency News: Aside from the hourly wobbles of Pound Sterling tied to Brexit debates, global FX is quiet.
Bonds. $TLT is now within a $3 trading range between $143 and $146. Nimble active traders can play within the range while swing traders can wait for a break outside the range. Long above $146 and short below $143.
Gold : GLD has pulled back during the equity advance. The next key level of interest for both bulls and bears is $140.50 which is both key support and the daily pivot point. At least some buying is expected to defend this level by the bulls. If however price were to drop below then the next support comes in at $136.
Trade Idea: On a break of $140.50, get short via either $GLD puts or 3x short gold ETF DGLD. Target = $136 on GLD
Silver : Like Gold, Silver is in pull back mode. Solid support comes in at $16.25. Notice the large volume / price bars at that location. There is also trend line support coming in at that location.
Trade Idea: If price reaches $16.25 get long Silver ( SLV ) or silver miners ( $SIL ) with a stop just below. This would also be a location to add to any pre-existing long position if you wanted to increase your exposure
$WTIC / $USO Oil has been choppy as traders toggle between supply and demand fears. On $USO, $12 has been a key layer of resistance. You can see that aside from a false breakout in late July, $12 has contained price for nearly 2 full months.
Trade Idea: Use $12 as a bull / bear pivot location. If price breaks above, get long with a target of $12.60. If price gets rejected at $12 ( more likely IMO ) get short with a stop just above with a target of $11.70. A more conservative short idea would be to wait for a break of the uptrend line.
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 )
Strategy Update: Time to re-assess the market.
Still watching carefully to see if the breakout holds. Although I have added a long position or two, not piling into bullish positions at this time. If the breakout is legit and prices go higher, I am fine paying higher prices. If the breakout is legit there will be plenty of time to add long exposure.
Risk off trades begin to crack. I still have exposure to Gold and Silver miners which may prove to be a mistake; stops quickly being approached. If Bonds / Precious metals continue to sell off, it would be supportive of higher equity prices.
Price had a nice breakout that is holding $297. With prices above $297, all-time highs are within reason with $301 then $306 as targets. If price loses $297, a dramatic move lower to $294 is favored with a gap fill.
Swing Traders: Stay long against $297 with an eye on T1 at $301. Below $297 and things get iffy with a huge gap all the way down to $294. Bears: On a break below $297, get short for a gap fill to $294. All bets are off if $294 breaks as it would signal a failed move which is very bearish.
SPY 60 min: Price has established a new trading range between $297 and $299. Traders can be long above $299 and Short below $297. The trading range is wide enough for nimble day traders to profitably trade inside the range by selling resistance and buying support.
Price has carved out a narrow trading range between $191.20 and $192.20 since breaking out last week. Below $191.20 is a lot of open air. Above $192 and the measured move target comes into focus at $199
Swing Traders: Stay long against $191 if you are long. Bulls last level of support is $190.39 which is the gap entry location. Below $190.39 and bears will likely take price to $188.33 to fill the gap.
QQQ 60 min:
The trading range is tight at only $1 wide. Unless you’re god’s gift to perfect entries and exits, trading a $1 wide range is tough. I like waiting for either a break above $192.20 to get long or a break below $191.20 to get short. These entries have the potential for be a multi day move.
$150 remains the bull / bear pivot point. Bulls are ok above $150; below $150 and things get iffy.
Swing Traders: $152.50 is the first target as long as price holds $150. Below $150 price is vulnerable to a gap fll down to $147.84
IWM 60 min
Keep it simple and visual; Use $150 as your bull / bear pivot. Get long above $150 and $152.50 is your first target. Get short below $150 and target gap support at $149.37. Below $149.37 targets a gap fill to $147.34.
Open Trade Set ups – None
KSU long on weekly breakout to 5yr highs
EDU long on a weekly breakout to multi year highs.
Triggered Trades –
OLLI Oct 62.5 C at $2.29 for gap fill
QURE Oct $45 P at $3.61 – Bearish continuation breakdown
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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