Trading Notes for Today, April 23rd

Sector Moves to Watch:

  • Crude Oil – OIL is what we are tracking for a possible entry as a short term trade. Move above the $20.85 is the key for a trade to $21.60 target. With the trade being only 3% we are adding it to the ONLY ETF Model and using the leveraged fund to increase the upside opportunity. The volatility in the commodity remains, but the bounce off the low remains after three trading days offers some upside opportunity.
  • Natural Gas continued to trade opposite of crude oil again on Monday. If this trend holds to be true then we can hedge our position in the ONLY ETF Model with KOLD (2X short). Buy $14,000 (equal to current holding value) of the fund to protect the downside risk of natural gas currently.
  • Gold gapped higher and we passed on the entry to play the move to fill the gap left on the downside. Still looking to play this move. Watch for a test of the F$136.80 level for an entry point. If the downside resumes, that will bring GLL back into play. For now watch for the upside follow through and possible play in gold as a trade.
  • Italy (EWI) has rallied back from the lows and is at resistance of $12.60. Looking for a break above this level and an opportunity to trade up to the $13.50 range.
  • VIX index fell back to 14 to on Monday. SVXY produced a solid upside trade. If the S&P 500 index continues to gain upside momentum the continuation of this trade is worth tracking. I am adding this to the S&P 500 Model as a swing trade.
  • Short trade on the S&P 500 Model with SH is near the stop. Manage the position today and take the exit if the open in orderly to the upside. If we gap higher take the stop off into the open and exit the position based on how the day plays out.
  • Technology has been lagging the balance of the market, but it is looking poised to play catch up on earnings. Texas Instrument announced after hours and beat estimates, traded higher after hours. Looking for XLK to trade back to resistance at $30.
  • NetFlix (NFLX) was up 20% following earnings last night. Watch to see if the this carries over to the markets and the sectors as well. The stock resides in XLY and should provide a boost to the ETF.
  • New Home Sales data is released today at 10 am and they will have some influence on the homebuilders. XHB has been on my watch list as the selling in the sector has pushed the stocks lower. Support has held at $29.70, but the downtrend is building. The establishment of a higher low last week is a native short term. Watch the response to the data and look for the winners, if any, to push higher. If the new is disappointing support on the downside could give way under the pressure. Fundamentally there are a lot of moving parts here and they building against the sector short term, but the longer term view remains positive. Today’s report will give some validation to which direction the sector trends.
  • IF technology, semiconductors and industrials can add to the upside, (they are poised to do so) the market could develop another rally or segment higher in the trend off the November low. The indexes found support relative to the selling last week. Bounced off support (Friday), held the bounce (Monday), and now needs to extend the move higher… Watch tech, chips and machinery sectors to provide a spark if this is to play out.

The futures are trading lower, but that doesn’t necessarily translate into a down day. Earnings are in the drivers seat for now. Watch the reports prior to the open and watch the futures as the trading day starts. Manage your stops accordingly and make the necessary adjustments if they are needed.