Trading Notes for Today, July 16th

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 move higher continued on Monday as a slower pace, but still moving higher? There are plenty of issues to question, but the buyers are fully engaged to put money to work regardless of the news. Citigroup helped set the stage for the move higher as the large banks continue to show improved numbers and some solid guidance moving forward.
  2. Welcome to earnings… let the stress begin. Citigroup beat expectations and rises 2% on the day. UPS warns and the stock declines 6.5%… this is going to be a roller coaster ride for stocks as they are priced for success and any missteps will end ugly. 72 S&P 500 companies report this week.
  3. The retail sales data for June fell short of expectations growing 0.4% versus the 0.9% expected. Ex-Auto sales sales slowed to 0% or no growth. This raises the same concern about the consumer and their spending habits. Are they showing signs of slowing yet again. XLY fell 0.2% on the report versus the broad index climbing 0.4% on the day.The revisions to GDP have been essentially cut in half for Q2 to 1% growth. The Empire State Index was the only positive relative to the economic news on Monday.
  4. The S&P 500 Model is updated for Monday’s trading. We have adjusted stops on our positions and hanging on for the ride currently. XLE is attempting to break above resistance at the $82 level. This could be worth adding to on a move higher. SPY was up 0.4% with Utilities and Telecom leading the upside. The volatility index held below 14 and added to the upside in SVXY with a 2% gain. Consumer Discretionary lost ground on the sales report, Financials are struggling as the banks react to the comments from the Fed Chairman, healthcare was up slightly and technology is coasting along. Don’t be greedy at this point just take what the market gives and manage your stops.
  5. The Sector Rotation Model is updated. The upside continues for the plays and  we continue to scan for low risk entries. 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, watch stops this morning as they are close.
  6. 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 with a solid gain. Financials, Japan, Small Caps and NASDAQ all continue to move up nicely with the broad indexes. Good moves higher and I adjusted the stops accordingly.
  7. The ONE EGG Model has a position in the small cap ETF and I continue to give it room to move higher. We need to manage the position, but I still want to give some room for volatility and hold the position as long as the upside remains. Hit target and now we manage the position aggressively to protect the gains.
  8. Financials are one sector I continue to watch despite the positive earnings from JP Morgan and Wells Fargo on Friday and Citigroup on Monday. 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 are holding the positive trend. This is setting up an opportunity to add positions, if the upside follows through.
  9. 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. GXC – China bottom reversal. Resistance at $66.30 and willing to add on the move through this level. Watch the volatility in the trade as China is dealing with slowing economic data.
  2. KBE – flag on test of the break higher and Bernanke. Looking for the continuation of the upside following the test. $30.40 entry point.
  3. Follow up on previous posts:
  4. GLD – double bottom – looking for break above the $124.50 mark. No change Monday.
  5. YHOO – Break above trading range. 27.30 level. cleared and testing added small position.
  6. AMGN – Break from trading range. confirmation and follow through $103 test and move. Got the $103 test early Monday and added the position.
  7. HPQ – breaking above $25.50 consolidation trading range. $26 entry on Thursday. Forming flag opportunity to add on upside if you choose.
  8. C – V bottom break above resistance at $50.50. Added on Friday. Nice move on earnings.
  9. KMI – break above resistance at $38.90 (V bottom reversal). added on the follow through upside. Stop now $39.
  10. ABBV – triangle consolidation. Break above the $44 level positive upside. Got entry on Friday breakout. Tested move on Monday. If retest the breakout watch and push stop to $43.50.
  11. IHF – Trading range near the high. Broke above $85.15. This is the healthcare providers ETF. The sub-sector is leading the healthcare sector currently. Holding the gains for now. Move stop to $85.75.
  12. COST – Reverse head & shoulder pattern. Break above $112.50 entry. Hit entry. Nice upside follow through and raised stop to $114.50.
  13. URBN – V bottom. Break above resistance at $40.53 and target of $42.65 (HIT – move stop to target).
  14. TJX – downtrending channel. $50.80 breakout above resistance. Moving higher. Stop $51.50.
  15. SJT – $16.10 break from trading range. hit entry. $15.90 stop. trading sideways still – dividend play.
  16. 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.
  17. 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 moved higher on Friday. Held move watch and manage the stop.
  18. 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 moved to the top of the trading range before breaking higher and adding positions. The move above $24.50 was entry for 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 on break) Sentiment towards the stock short term is gaining. Consolidating at the current levels and holding. Still like the upside near term as it is gaining positive comments from analyst.

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.