Trading Notes for Today, May 28th

Friday turned out to be a slow day with the three day weekend ahead. As we look to Tuesday and the kickoff of the trading week there is still the challenge of sellers versus buyers taking control of the trend or direction short term. Three days of the sellers testing the waters and now they decide to take control or the buyers step in and push the indexes higher. I am not aggressive at this point as too many questions are left unanswered. Take what the market gives and focus in on protecting principle.

Sectors to Watch:

  1. What about the short plays? Yes, we added SH on the downside on Thursday and we now have to manage the lack of volatility that would drive the risk of the short play. The focus is still on the VIX and volume relative to the direction. Be patient measure the risk and take what comes.
  2. Volatility play with VXX or SVXY. If the move in the VIX goes back above the 14 and 15 level adding to the position in VXX. If we reverse and move lower in volatility look for stocks to rally.
  3. Japan falls on yen rally and worry. Is this a trading opportunity? EWJ held on Friday. $11.45 entry worth watching.
  4. TLT – is $116 the support level? Volatility in the yield is pushing the ETF lower. TBF may be the trade to hold and watch as the bonds unfold, but TBT will also offer trading opportunities to use the leveraged trade short on bonds going forward. Break below $116 add TBT.
  5. OIL – Dropped near $92.20 support and bounced to close back near the $94 mark. Too much volatility short term to get in or out of trades easily. A continued move above $94.50 offers a trade on the upside in crude.
  6. Facebook – A break below $25 raises the question on hold and add to position as it bottoms, or sell and buy back as it bottoms. I am selling and buying back as the next support is 10% lower at $23.28. STOP ON THE CLOSE of $24.75. The stop was hit on Friday and we are looking to see how this settles out. Too much negative publicity short term. The Waze acquisition is back in the news with Google in the mix (negative that Google is in the mix). News of teens like Twitter better, etc. All negative media talk circulating and putting downside pressure on the stock. Time to watch and see how it unfolds short term.
  7. Last week we were looking for the confirmation of any downside activity. We got some, but not enough to change the trend or the short term outlook. The uncertainty of the Fed action has put doubt or uncertainty in the market short term. All the events are in place, but the sellers have to be willing to take control. If not, there is still plenty of cash to deploy from the buyside. Be patient and let direction unfold and some clarity to develop.

Pattern Setups For Today:

  1. The futures are pointing to
  2. SKYY – tested lower with support at $21.35. Look for move back above $21.73 on upside as entry.
  3. QCOM – test of support at the 200 DMA. Held now looking for follow through on the upside. $64.65 level for entry on the upside.
  4. TBT – break from consolidation if yields continue to rise short term. $66.50 entry.
  5. PACB – Break above the top the trading range. $2.65
  6. RRC – Wedge consolidation breakout, test and move back above the 200 DMA. Broke the downtrend line.
  7. Follow up from Friday’s List:
  8. ELN – Break above $12.10 top of trading range. Got the break and to follow through. Stop at $12.10. In the drug sector which has seen positive momentum of late.
  9. CHK – Tested the breakout held and is ready to move higher? $23 target.
  10. VVUS – Break above $13.75 cup and handle. In the drug sector as well. Solid move higher and confirmation.

Still plenty of positives in traders minds. The futures are positive to start the shortened trading week? Let’s watch to see how this plays out as the buyers push their beliefs.  Watch, protect against what isn’t working and add to what is, don’t fight the trend.

Don’t forget the Webinar Today at 5 PM! See you there.