Notes for Today, March 24th

Jim’s Market Notes:

Interesting day as the markets attempted to follow through on the bounce from last week, but by the end of the day it has erased the modest gains and closed in the red. Technology struggled on the day. Biotech fell 2.1% after big move last week. The dollar continued to move lower and telecom was the only bright spot in the S&P 500 index. Day of rest and testing is as simple as I can explain it.

Volatility index moved back above 13, but not enough to show any major concerns for the markets. The lull in the index can last for prolonged periods if there is nothing to fear or the horizon. Currently plenty of worries, but investors are more engaged in where to invest versus not investing.

Fed and interest rates remain one of the top topics of choice… of course that leads us to the speculation in oil, gold, silver, global markets and bonds. Bottom reversals over the last five days have been the technical trade of choice as the stock indexes hit the next level of resistance and previous highs. Catalyst was FOMC meeting outcome… what takes it higher and sustains it? Earnings are only 2-3 weeks out and that could make things interesting relative to the dollar effect on Q1 earnings.

Still need a follow through to the move from last week.

SECTOR NOTES OF INTEREST:

Semiconductors (SOXX) made break above the $97.70 level of resistance and looking for the next level to hit new high above the $99.50 level. Tested Monday? Still in position to move higher. {31 stocks in sector with SWKS and CREE leading over the last week.}

NASDAQ (QQQ) In position to break higher, but tested on Monday. Looks just like the SOXX chart? Coincidence?

Russell 2000 (IWM) cleared¬†the $123.75 high.¬†Taking on leadership again. Short term uptrend still in play… current story is rotation on stronger dollar… that could unravel if the dollar weakness sustains.

Volatility Index (VIX) testing lows as the uncertainty disappears. Fed is catalyst on the move watching how that  unfolds.

Transportation (IYT) Watch as indicator for the broader indexes. Trading range still in play with significant drop on Monday 1.8%?

Dollar (UUP) broke¬†support at the $25.75¬†and now $25.25 next¬†with the 50 DMA. Helping gold, oil and emerging markets with the downside move. The rally has stalled, but will return as the Fed regains their thinking process on interest rates near term. Traders are rotating with the speculation… manage the risk if you trade effects.

Bonds¬†(TLT)¬†Rallied on the FOMC news… question is how much and how long does it last?¬†Stalling near the high and the 50 DMA would be my exit point on any trades in the bond.

Gold (GLD) cleared the $113 resistance. Sustainability of move higher? Dollar dependent for now. Watch how the dollar responds and take your cues. Gold miners are worth trading on the move with NUGT if so inclined to accept the risk. (ONLY ETF Watch List). Nice follow through on Monday.

Software¬†(IGV) ‘V’ bottom and ready to break higher, but resistance is presenting a test for now. The doji candle left resulted in a move lower on Monday. Confirm the downside or resume the upside? Patience.

Networking (IGN) bottom reversal needs to clear resistance on stronger volume. I like the parts better than the whole and would scan looking for leadership.

Europe (IEV) nice follow through move on Friday. The stimulus from the ECB is in play… EWG, EWP, EWI, EWQ, FKU, and others are leading the upside opportunity on this move. All of the global markets got a boost from the weaker dollar last week and continued on Monday. That leaves the question about the dollar on the table… higher or lower? That makes any trades relative to this higher risk as it is based on the speculation of the outcome going forward.

Global markets taking on role of leadership… but, risk remains high regardless of the stimulus in place. Scanning the country ETFs shows plenty of trades, but the risk is elevated as well. Take within your comfort zone relative to the risk moving forward… never assume.

“Vision without action is a daydream… Action without vision is a nightmare.” Japanese Proverb.

Long Term Opportunities: 

Long term positions take time to manage and patience to let them unfold. The short term can be managed with hedging or trading off the longer term positions. The goal is to build the position and manage the risk. Sometimes the short term news and events cause anxiety… the goal is to mitigate the risk and protect the downside as we allow the stock time and room to grow. If you don’t like long term holdings don’t read the data below.
  • Facebook (FB) – $73.15 entry (10/16/14) added 1000 shares back relative to the long term outlook following the choppy drop in markets. Earning remain¬†good, but the outlook showed higher costs and has kept pressure on the shares to stay in the current trading range. >¬†Added to position: 500 @ $77.50 – 1/8< ¬†TODAY:¬†¬†Gapped higher and hit new high last week.¬†¬†Continues to show strength for now…. patience.
  • Twitter (TWTR) – ¬†(1) Added 500 shares at $42.80 (10/28/14). (2)¬†Added 500 shares at $39.20¬†on¬†1/9/15. ¬†(3)¬†Added 500 shares at $40.25 for trade Sold at $46.25 on 3/10/15. This is a long term holding, but we will trade on short term technical data if warranted. TODAY:¬† Use $45 at exit on shares added (#2 above). ¬†Nice bounce, but still in the range off the break higher from earnings. Patience as this unfolds. ¬†
  • Bank of America (BAC)¬†(1) Added Jan 2016 $17 Calls at $1.15 (avg price)/300 contracts. (2) Added 2500 shares at the $16.35 mark ¬†on 10/21/14. Banks are¬†gaining some ground on the proposed hike in interest rates and I still like our position going forward as we practice patience. TODAY:¬†¬†Not shaping up looking forward and we will look at exiting the position to find a better long term opportunity. HIT STOP and sold positions to move on to other opportunities going forward. T00 many anchors to drag along currently.
  • Whole Foods Market (WFM)¬†(1) Sold our first position for a $6.50 profit on 1000 Shares held from 11/20/14 – 3/11/15. The outlook has improved after making changes to the stores and adding new stores. The earning validated what I have been following for the last year and the company should be at the front side of a long term upside based on fundamental growth. I still like the long term outlook for the company. TODAY:¬†Moved below¬†the 50 DMA and we watch to see how it unfolds near term.¬†Lost momentum, but we will let this unfold and let the uptrend resume.