Trading Notes for Today, July 11th

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 Fed minutes was the buzz of the day, but no big changes or any big surprises in the minutes. That leaves everything open for debate and the opportunity will be in how it plays out looking forward. The after-market futures were trading higher and the volatility picking up as the Chairman spoke and separated the difference between tappering on the $85 billion and raising interest rates on the overnight Fed funds. It seem to help and we will see how that news trades in the early morning. The upside is still in play and if the new comments from the Fed hold look for more upside today.
  2. The S&P 500 Model is updated and we are looking to add some positions again if the upside continues. Looking to add to XLF and SPY if we can get a reasonable entry today. Let the early trading settle down and then take the positions if they don’t gap too far. I am still interested in adding to these positions as the upside is gaining some clarity on the Bernanke comments as a trade short term. 1655 is resistance for the index and 1625 support near term. A test lower would give a entry point for the posts.
  3. 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.
  4. 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. Nice bounce on the oil trade from Tuesday, raised stop on the trade as well as other position. Manage your risk in these positions. Hit stop on YCS as dollar drops on Bernanke comments. Watch and see how it plays out going forward on the buck.
  5. 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. Held move on Wednesday and still managing the outlook short term.
  6. 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. HPQ – breaking above $25.50 consolidation trading range.
  2. C – V bottom break above resistance at $50.50.
  3. Follow up on previous posts:
  4. 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. Test in play on Wednesday as the Bernanke factor steps in again. Watch.
  5. ABBV – triangle consolidation. Break above the $44 level positive upside. Still testing to break above resistance.
  6. 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. Holding the gains for now.
  7. COST – Reverse head & shoulder pattern. Break above $112.50 entry. Hit entry on Monday. Nice follow through and raise the stop to break even.
  8. IAI – Break above $31.50 new high. Tested lower and ready to break higher. Hit entry on Monday. Continued higher.
  9. URBN – V bottom. Break above resistance at $40.53 and target of $42.65. Made move and followed through nicely. Stop up to $41. Added upside on Wednesday.
  10. TJX – downtrending channel. $50.80 breakout and resistance break. Moving higher. Stop $50.50
  11. SJT – $16.10 break from trading range. hit entry. $15.90 stop.
  12. RF – Consolidation breakout test. $9.36 break point. Still moving higher stop $9.85.
  13. 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. Could add on break above resistance at $420?
  14. 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, but working its way higher again.
  15. 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.
  16. AMZN – Breakout test. $270 was the break from the consolidation range. Took the trade entry $273. (hit entry). Stop $284 raised. Still moving higher?
  17. KBE – Triangle pattern. Break to the upside trade at $28.50 entry. Watch the downside. Hit new high and stop at $29.30. Some selling on the Bernanke news. Watch this morning and honor your stops here.

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. (Added 1000 shares today at $25.65) Nice break through the upper side of resistance at $25.15 and now the 200 day moving average. Sentiment towards the stock short term is gaining.

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.