Trading Notes for August 19th

Notes for Trading: 

Nice start to the week of trading with a solid upswing in stocks on the quiet talks in Russia and Ukraine. If this gets settle peacefully the fear will come out of the broad markets and boost the upside move short term. The economic challenges would remain, but the upside become the bias.

NASDAQ leads the way higher with the internet stocks providing the leadership for the index. Both have been key to this point on the bounce and should continue to provide more upside.

Test? We have made it higher five days on this bounce/reversal off the low and a test of the move would not be out of the question. Watch to see how it unfolds moving forward.

Sector Notes: 

Below are some key notes on events and what we are watching looking forward:

  • Biotech (IBB) remains one of the positives for the upside move. The last four days have pushed the sector back to the July high. Look for follow through on the move higher and trade opportunity on the move. Entry $266.50.
  • Transports (IYT) jumped 1.7%. Cleared $149 resistance and looks prepared to move higher. Positive sign for the transports to move higher. Airlines leading the way. Worth watching the parts. JBHT held 200 DMA with double bottom setup? UNP broke to new high.
  • Consumer (XRT) moved back near the $86 level and in position to break higher. This is a trade on momentum nothing more. Earnings are hitting on the stocks and they are mixed at best, but the issue is the forward guidance being lower by WMT, JWN, and TJX to name few that matter in the space. Trade the momentum, but be aware of the issues at hand… lower paying jobs and stagnant wages.
  • Treasury Bonds (TLT) watch for reversal if the geopolitical issues subside in Russia. TBT is back on my watch list for trade on the move.
  • Small Caps (IWM) made a move to the $115 level and the next resistance along with the 200 DMA. $112.50 was the entry point and managing the risk with a first target of $115 now attained.¬†Stop at $112.50 or break even. first signs of some upside momentum on Monday.
  • Russia remains a talking point as the Putin continues the game war with Ukraine. Peace talks? Rumors only at this point, but it is enough to rally the sector.¬†Hit entry at $24 and with $23.50 stop to watch.¬†Upside bias if peace is the solution.
  • Internet (FDN) remains¬†one of the stronger sub-sectors in¬†tech. Moved above $60.70 as the next entry point Monday and followed through on upside. ¬†$60.25 entry point on short term breakout from triangle. Stop $59.50. Large caps have momentum for now.
  • China (FXI or YINN) The upside remains positive and continuation of move last¬†week¬†gave another opportunity for¬†adding the position back based on the resilience in the country short term. Added at $40.50 and willing to add again with confirmed close above $41.25 entry point to¬†add to position. Added to the position and stops now at $40.25.
  • Emerging Markets (EDC or EEM)¬†–¬†Bounced off the lows and looking for a follow through on the upside at $44.30 entry. This has been volatile on all the news and geopolitical events. If they remain in the headlines this will remain¬†a volatile trade. $43 stop as result.
  • Real Estate (DRN) tested support near the $58.40 mark. Entry $61 on trade. Managed to bounce off the lows and has now¬†regained the upside momentum with the move back above the $62.85 resistance and held.¬†The interest rate concerns are being pushed to the side for now and looking to move higher.¬†Holding for now, but keep your stops in reasonable location $61 or break even.

Practice patience and let this new chapter of the markets story unfold.

Monday Trade Opportunities:
Trade Opportunities:
  1. TXMD – entry $5.50. break from consolidation. In the drug sector and in position to move higher. be patient and watch the volume it sometimes falls during day.
  2. ITB – entry $23.50. bottom reversal. The data is showing some signs of bottoming. There is more data out today on permits could help upside.
  3. XME – entry $43.50. Break from consolidation. Stocks are moving in the producers and miners logically would follow. max entry $43.80.
  4. SPY – entry $196. bottom reversal and clearing the next level of resistance. Gapped open and passed on the trade entry.
  5. CORN – entry $26.70. trading range bo. Bottom reversal breakout potential as trade. Gapped open and let some anxiety trade out. It then reversed any early momentum. Still watching.

Pattern Trade Tracking & Follow Up:

  1. YHOO – entry $36.50. trading range break. Internet sector moving higher. Stop $34.40
  2. NKE – entry $77.70. trading range break. Watch for move higher prior to earning on 9/22. Stop $76.
  3. CELG – entry $89. wedge breakout. healthcare leadership short term. Stop $85.
  4. BTU – entry $16.05. double bottom reversal. Energy gained on news… got the¬†follow through for entry in the trade. Stop $$15.70.
  5. RFMD – entry $11.50. pennant upside continuation. Need semiconductors to regain positive momentum if broad markets are to regain upside. Stop $11.
  6. EEM – entry $44.50. break above resistance again. upside trade still looking longer term. Stop $44 for now, but give some room if the volatility picks up.
  7. SSO – entry $113.50. Bottom reversal on test lower. Trade on the bounce only for now. $117 target on the trade. Stop $113.50.
  8. SOCL – entry $20.15. Cup and Handle breakout. Upside back in play. Stop $19.80
  9. FDN – entry $59.85. trading range. Upside still in play. held up well in selling last week. Stop $59.
  10. VMW – entry $100.50. trading range breakout and test. Upside value along with EMC. Stop $97.80. Use some patience on upside move.
  11. PLUG – entry $5.10. Base breakout. Looking for the move from the base to accelerate as the trend is drifting higher. Stop $5.10
NOTE: The pattern trades above are setups that I see for a potential swing trade or short term trade opportunities. Some will fail to follow through on the pattern, some will break and trade according to the pattern. The key is to use discipline in the trades. Entry, Exit and Target on all trades is vital. I am posting these as opportunities that I see when doing scans daily. You can use them as a teaching tool or you can trade them, either way please use discipline. The best way to treat these as a learning tool is to assume a $100,000 portfolio and each positions receives a 5% allocation. If we state to take a 1/2 position as an example you would only allocate 2.5% to that position. I would use a downside risk of $500 per trade as a maximum loss. That will help  you learn position sizing and risk management. All investing comes with risk. Our job as investors is to manage the risk. Keep your focus and discipline in place.
Long Term Opportunities:

  • Facebook (FB) – Testing the break higher and has held up well in the recent selling. $73.15 entry point to add 1000 shares back on the long term outlook. (see note page for history. ADDED shares on 8/7 – $73.15 — Stop $71.50