Trading Notes for Today, July 15th

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. Welcome to earnings… let the stress begin. The true test starts as there will be plenty of earnings data to set the tone for the broad markets. The challenge will come in the fact we have already moved to a new high putting more pressure on the data. The sentiment, as we stated in the weekend update, is optimistic and that could offer even more stress for the results. All eyes will be on the guidance as well as the Q2 data. Remember that most analyst are projecting improvements to growth in the second half of the year.
  2. The S&P 500 Model is updated and I have raised the stops to account for the move on Friday. We have adjusted stops on our positions and hanging on for the ride currently. SPY gapped open and I was not willing to chase to add to the position. We have moved to a new high at 1680! Onward and upward for the index is the motto for now. The volatility index dipped below 14 and added to the upside in SVXY, which we have raised the stop on the move. Don’t be greedy at this point just take what the market gives.
  3. The Sector Rotation Model is updated. The upside continues for the plays and  we adjusted stops again to account for the moves higher. I added DBC to the watch list as commodities are finding some footing and moving higher short term. This offers less volatility on the upside than GLD or OIL at this point. The utilities have moved up nicely off the lows, semi’s have recovered and we are watching TBF as yields start to stabilize from the Fed comments last week. Still look for a test of the move higher.
  4. The ONLY ETF Model continues to take on short term trades and has done well with them to this point. We added URE as real estate builds a base and looks to move higher. UCO (crude oil trade) has moved higher with crude after the entry last week. Good moves higher and I adjusted the stops accordingly. Manage your risk in these positions.
  5. The ONE EGG Model took the position in the small cap ETF and continue to give it room to move higher. We need to manage the position, but I want to give some room for volatility depending on how the week begins we will hold the position as long as the upside remains. We raised the stop to start the trading week.
  6. Financials are one sector I continue to watch despite the positive earnings from JP Morgan and Wells Fargo on Friday. The Bernanke comments have put pressure on the sector and we could see a further test as the balance of the reports are made. KRE and KBE both tested lower, but ended the week positive. This is setting up an opportunity to add to positions, if the upside follows through.
  7. We still have to manage our risk in the current trading environment. As long at the trend higher continues maintain your positions and manage your stops.

Pattern Setups For Today:

  1. GLD – double bottom – looking for break above the $124.50 mark.
  2. YHOO – Break above trading range. 27.30 level.
  3. AMGN – Break from trading range. confirmation and follow through $103 test and move.
  4. Follow up on previous posts:
  5. HPQ – breaking above $25.50 consolidation trading range. $26 entry on Thursday.
  6. C – V bottom break above resistance at $50.50. Added on Friday.
  7. 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. Got the move higher on Thursday. too play at $39.50.
  8. ABBV – triangle consolidation. Break above the $44 level positive upside. Got entry on Friday breakout.
  9. 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. Move stop to $86.
  10. COST – Reverse head & shoulder pattern. Break above $112.50 entry. Hit entry. Nice upside follow through and raised stop to $114.50.
  11. URBN – V bottom. Break above resistance at $40.53 and target of $42.65 (HIT – move stop to target).
  12. TJX – downtrending channel. $50.80 breakout and resistance break. Moving higher. Stop $51.50.
  13. SJT – $16.10 break from trading range. hit entry. $15.90 stop. trading sideways still – dividend play.
  14. AAPL – bounce off support – resistance $403. Clears on volume look for upside trade. $405 August call option taken $16.50. We sold half the trade to lock in gains and let the balance play out. The test bounced and closed above $420 Tuesday. Added to the play ($422)… nice move to the upside. A move back below the $420 level is exit on all positions.
  15. PMCS – Trading range breakout. $6.25 is the top end of the range to break above. Added position. Entry $6.45. Set stop at $6.50. Survived the test and move higher on Friday.
  16. AMZN – Breakout test. $270 was the break from the consolidation range. Took entry $273. Stop raised to $298. Big week on the upside and need to protect the gains here. Willing to sell half this week if test back.

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. Consolidating at the current levels and holding. Still like the upside.

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.