Weekend Profit Navigator Nov 1

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Tickers discussed: SPY / QQQ / IWM / Commodities / VIX / $TRAN/  GBTC / AAPL / AMZN / MSFT / FB / NFLX  Strategy update

The Weekend Profit Navigator provides a big picture stock market analysis for the week just past with a look ahead. 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.

Companion Video

The companion video provides additional commentary to the charts and set ups shown below.

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Earnings

Pre-Election Factoids

FiveThirtyEight  has Biden with 89% Win probability

Anecdotally the race seems closer than a complete blow out. Many pollsters are staring at career risk if they blow the call 2 elections in a row. Will be fun to watch.  2 states to look at for early clues are Florida and North Carolina. These states, in addition to being battlegrounds, are already busy counting mail- in ballots and thus should have better predictive results the night of the election. Other battleground states won’t begin counting until the day of the election and thus may not know the outcome until days later.   If Trump loses either NC or  FL the path to the Presidency gets harder. If he loses both, almost impossible.

Post Election scenarios according to BoA Research

Pre-election Vol spike is normal. 

In 2016 there was a similar Vol spike heading into the election.

A Post-election Vol Crush is expected but far from Certain. 

Bill Luby from VIX and More provides the graph on the expected VIX crush based on election periods going back to 1992.  But this is 2020 and as whacky a year as markets have seen in a long time. While the probability of events such as contested elections, riots, and / or other events are low, it is not an absolute given that VIX gets whacked, at least not immediately.  One could paint scenarios where the vol stays elevated for a number of weeks; especially if the election is the trigger and not the event.   This is what makes taking directional views ahead of the election so treacherous. One would be buying options at elevated vol, then after the election watch their value “disappear” as vol comes out of the system.

 

Despite Turbulence; Nobody is scared.  PUT / CALL Extreme-o-Meter neutral

The excessive call buying has been knocked down but nobody especially motivated to buy PUTs either.

 

A Rough Week for Commodities

$COPPER consolidates; needs to hold $3.00 to keep the bull case fully intact.

$WTIC   Oil flashes a Risk Off impulse and drops 10%

Oil finds itself on a ledge at $35.  A drop below $35 opens up a potential move to $30

Is Bitcoin the new Safe Haven? 

Bitcoin up 7% this week.  Gold down 1.7%.  TLT down 0.3%.    Something to think about.  From the chart, $16 is the gateway level to the Dec 2017 highs.  Pay attention. You may be able to take advantage of a uni-directional move above $16.

Oscillator Positioning

$NAMO and $NYMO are at the bottom of the range and are teetering on oversold conditions. During garden variety market conditions one would be cautious about holding shorts in this area. But with the “Big Event” on the horizon, there is plenty of room for a spike low in these oscillators.

$NAMO

$NYMO

$TRAN – Transports flash warning signals

RSI trend line break= Yellow Flag;  PPO threatening a bear cross = Yellow FLAG; Decisive and impulsive price break of trend = Red FLAG.  Price Relative in bottom panel no longer rising and was unable to break through downtrend resistance.= Yellow Flag.     Price is at key support at 11,000.  A break and close below puts price on the wrong side of the chart and calls into question the recent breakout.

$VIX

Higher lows and higher highs.  35 sets up as a short term pivot point. A break below $30 would be supportive of equities. A break above 40 spells turmoil.

Broadening Top scenario still alive

More or less a cocktail conversation starter at this point. Weekly closes below the 40ema at 3200 increases the interest. A move below the weekly pivot at 3016 which coincidentally aligns with the top of “value” will get more traders sitting taller in the chair.  Something to watch but not something to trade off of IMO.

Looking at the Indexes

SPY Weekly

PPO puts in a bull cross and RSI breaks trend which favors lower prices.  That 40week ema is now in view. You can see the big “Value Range” begins at $295.

SPY Daily

We’ve all but tagged the technical target of $320 at the bottom of the recent trading range.  What if we broke below $320, flashed $315, cleared out a ton of stop and got everyone bearish and then rip it the other way.  I sit in a dark room and think of scenarios like this that would daze and confuse the most people. 🙂

QQQ Weekly

Despite the rip a couple of week’s ago, the PPO bear cross is still in effect and RSI has proceeded lower.  $260 looks like an important level.

QQQ Daily

Price re-entered the prior trading range but has held a trend line off the February high.  A break below $260 open up multiple downside scenarios. Don’t discount the possibility of a stop clearing run followed by a rip higher.

IWM Weekly

RSI and PPO managing to stay positive but threatening to breakdown. Key off the 40week ema. 

IWM Daily

Price in the middle of the $140-$160 value range near $150. A break below $150 would open up the lower half of the range and down to $140.  Holding $150 looks to be relatively important.

Taking a look at a few FAAMG Names

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