Trading Notes for Today, July 10th

The Watch List and Play List have been updated for today. Review and execute according to your risk and investment objectives. If you have specific questions on any posts please forward them directly to Jim@JimsNotes.com.

Sectors to Watch:

  1. The broad market indexes held the move above 1630 and closed at 1650. The next resistance level is the 1652 mark and thus far investors are showing no signs of not continuing the move higher. Dow is at breakout point as well at 15300. The NASDQ is likewise in a position to break higher. Patience as this sets up and works out short term./li>
  2. The great rotation talk is still rattling around the media of money shifting from bonds to stocks. The value of bonds have declined more than 10% this year eroding wealth from ownership of bonds, but the mass selling of bonds to buy stocks? Still not seeing the great transition or rotation. If there has been a great rotation it has been from REITs to stocks. Scanning the holdings of IYR is very revealing relative to ownership of the sector. Both sectors have my attention the buy side, but the bottom will have to form first.
  3. The S&P 500 Model is updated and we did not add any new positions on Tuesday. Both the additions posted for XLF and SPY gapped higher Monday and didn’t leave enough room to add to the positions relative to the short term targets. I am still interested in adding to these positions, but we are starting to see some potential signs of a test relative to the recent move higher. 1655 is resistance for the index and 1625 support near term. A test lower would give a entry point for the posts.
  4. The Sector Rotation Model is updated. We added IAI on the break higher for the sector. SMH broke higher and then reversed on downgrades relative to INTC, but bounced on Tuesday. IJR has moved too far for the entry on Friday and Monday. Utilities were up 2.1% the last two days as interest rate fears calm some and this is still a position I would like to own with a longer term time horizon.
  5. The ONLY ETF Model continues to take on short term trades and has done well with them to this point. We added new trades last week and we continue to manage the risk of those trades this week by adjusting stops. UCO (crude oil trade) pulled back below the entry we posted and now the provided the entry. Don’t get anxious let the trade develop.
  6. The ONE EGG Model took the position in the small cap ETF on Friday. We need to manage the position, but I want to give some room for volatility depending on how the upside and earnings mix. Nice move higher on Tuesday.
  7. We still have to manage our risk in the current trading environment. If we continue above the current resistance levels maintain your positions.

Pattern Setups For Today:

  1. Follow up on previous posts:
  2. KMI – break above resistance at $38.90 (V bottom reversal). Closed at $38.97 and added the short term trade Tuesday on the follow through upside.
  3. ABBV – triangle consolidation. Break above the $44 level positive upside. testing lower? watch one more day for upside follow through.
  4. IHF – Trading range near the high. Broke above $85.15 on Tuesday. This is the healthcare providers ETF. The sub-sector is leading the healthcare sector currently.
  5. COST – Reverse head & shoulder pattern. Break above $112.50 entry. Hit entry on Monday. Nice follow through on Tuesday and raise the stop to break even.
  6. IAI – Break above $31.50 new high. Tested lower and ready to break higher. Hit entry on Monday. Continued higher.
  7. URBN – V bottom. Break above resistance at $40.53 and target of $42.65. Made move and followed through nicely. Stop up to $41.
  8. TJX – downtrending channel. $50.80 breakout and resistance break. Moving higher. Stop $50.50
  9. SJT – $16.10 break from trading range. hit entry. $15.90 stop.
  10. RF – Consolidation breakout test. $9.36 break point. Still moving higher stop $9.85.
  11. AAPL – bounce off support – resistance $403. Clears on volume look for upside trade. $405 August call option taken on Monday $16.50. Failed to break above $420 and tested lower. We took take half the trade off (Wed) and let it play out. The test bounced and closed above $20 Tuesday.  Stop is still at the $410 level on the second half.
  12. PMCS – Trading range breakout. $6.25 is the top end of the range to break above which closed higher on Thursday. $6.35 Entry if the move holds (Friday entry). Set stop at $6.25. Big Test Monday.
  13. KRE – Triangle pattern. $32.90 entry on the move higher. Hit the entry. Use $35 as the stop on the trade. Achieved the target — raise stop and manage the trade.
  14. AMZN – Breakout test. $270 was the break from the consolidation range. Took the trade entry $273. (hit entry). Stop $284 raised. Nice gain on Monday.
  15. KBE – Triangle pattern. Break to the upside trade at $28.50 entry. Watch the downside. Hit new high and stop at $29.30

Facebook (FB) Update:

  • Facebook – The sentiment towards the stock has shifted as it found support at the $22.80 level and is in the process of moving to the top of the trading range. Move above $24.75 and added position.
  • Added position at $24.75 (1000 shares). Stop is $22.75 for now. A move back above the 200 day moving average and we will add to the position. Still needs to break through the upper side of resistance at $25.15. Got the follow through on the upside through $25.25.

NOTE: The pattern trades above are setups that I see for a potential swing trade or 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.

All investing comes with risk. Our job as investors is to manage the risk. Markets remain choppy and directionally challenged for now. Keep your focus and discipline in place.