Every morning I post to Jim’s Notes to communicate what is taking place in the market relative to my perspective and how it will impact the trade in our models as well as the opportunities on the horizon. In doing so I keep my comments generic in nature with the specifics put on the Watch List of the various Model for subscribers. Thus, I am launching a new post each morning for subscribers that will give you specific trading instructions relative to the trading day. I know you love change and gladly embrace it:) The good news is each morning you can now go directly to the Research Page and there will be a new post under Trading Notes for Today… I wanted to do this so those who are short on time can go directly to the post and match them to the Watch List with the entry price for placing trades or tracking what is happening with the tables. Any feedback you have is welcome as we are always trying to improve our research and how it is presented to you.
So, where does that leave Jim’s Notes? More Changes? Not really, I am going to use this for more of a blog type post with more of an educational bent to help those who want to learn more about research and trading. The focus will be to take current market events and trends in the market, using them as a teaching tool to help readers understand how to use data and convert the data to trading and investing opportunities both short and long term. The posts will be archived by subject for retrieval and viewing.
With that said, this is the heart of earnings season and the theme remains the same, missed revenue or top line growth. This issue is bugging those like me who watch fundamentals and match them to what is happening in the economy. In other words, we should be seeing changes in the market relative to the data, but that has not evolved. I have been discussing the issues with the economic data for March, the reports not meeting expectations, but more importantly it is the slowing growth or lack of growth in the numbers reported. If the economy is stalling, growth in sales becomes a challenge for companies. That is exactly what we are seeing in the numbers, but to this point it has not bothered investors. Each period of selling has been met with buyers willing to push stock prices even higher regardless of the data. Why? Simply put, they don’t want to miss out on the upside move. The risk of each new stage of this trend increases as we move higher, and we have to manage that risk according to our objectives and risk tolerance. In my mind this is like watching a game of musical chairs. It is all fun until you are the last one standing with nowhere to sit. As many have said before me, fundamentals don’t matter, until they matter. There will be a time when they matter and you have to be prepared for the downside results. When the music stops everyone will be scrambling for a chair.
I am still a firm believer in you have to take what the market gives. Currently it is seeing some rotation to technology the last two trading days. That does not change the trend of anything, but it is worth watching and looking for any short term opportunities. If you look at XLK, SPDR Technology ETF you will see last week the sector sold to support at $29.20. The selling over the last two weeks came after hitting a new high for the year. That is the emotion or news driving investors. The data from the economy, earnings, Europe, etc. have taken away the confidence of investors as it relates to the future growth of the US economy. That lack of confidence has led to a news driven market environment short term. Monday the shot higher came from earnings news as the driver. If the earnings news in the technology sector remains on the positive side buyers are willing to step in and push price higher. Apple is on the docket today, and they will make or break the sentiment with their results from my view. Microsoft and Intel have found renewed favor with investors and are worth watching as well on the upside. Look for tech to be an influence on the overall market with earnings this week. If they are positive, an upside move back to $30.40 for XLK is an opportunity that could develop.
Remember the key to being successful as an investor and trader is confidence in your strategy. Define your entry, your target and your exit (target and stop) for every position in your portfolio. Know your time frame and your risk tolerance as an investor. Plan your trades and trade your plans. Simple and disciplined is the key to success.