Trading Notes for Today, July 1st

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 are at resistance following some minor selling on Friday. Do we test the lows or go higher? The futures are pointing to the upside to start the day, but there is plenty to resolve with the start of a new month and quarter for investors going forward.
  2. The S&P 500 Model is updated to address this week’s outlook. I am still looking for a test or continuation of the downside trend. That would add to our position in SH (short the index) and VXX (rise in volatility). Relative to interest rates flattening or even declining slightly, I added XLU and IYR. Both are short term plays (3-9 months) and we would add to the positions as they unfold moving forward. If rates do stabilize money will rotate as a defensive play. The Telecom trade is for those willing to take the risk of the trade opportunity. I am not adding to the model, but the trade is setup to move. Finally the SPY upside trade is if I am wrong about the downside test or move and the upside continues we will take a long position in the index.
  3. The Sector Rotation Model is updated to address this weeks trading plan. SH and PSQ are short trades on the major indexes to go with theme of the downside continuation. Both entries are posted with max entry points and avoidance of any gaps on the upside. Raised the stop on TBF and will sell if the Treasury bonds continue to flatten out. Utilities are a longer term trade opportunity if the rates stabilize. The yield, plus the upside opportunity over time make a good holding during a volatile market.
  4. The ONLY ETF Model continues to take on the higher risk trades that we are finding and has done well with them to this point. Treasury bonds are set to bounce and I am adding the leveraged ETF TMF to capture the move. QID remains on the list to capture the potential downside in the NASDAQ as set and discussed last week. SSO is added to capture the downside opportunity on the S&P 500 index. Short plays in oil and China a are also posted as the weakness remains in these sectors. If the markets reverse and continue the upside we will have to make the necessary adjustments to these trades and add upside positions, but as stated in the update the downside trend off the May 21st high is still in play and the test last week provides a logical entry point for additional plays.
  5. The ONE EGG Model has been set on the short play of the NASDAQ and is near the entry point. Watch today’s open and play accordingly. Don’t chase the trade and use a max entry of $24. This is a leveraged ETF and expect some volatility. This is the same trade set up for the ONE EGG Fund/Annuity Model.
  6. The Fund/Annuity Model is defined similar to the Sector Rotation Model above and will take on the same short NASDAQ and S&P 500 index trades if the entries are hit.
  7. Gold bounced 3% on Friday? Dead cat or upside opportunity in the trade? $1270 resistance on the upside and too close to trade short term. Watch to see how this unfolds for any opportunities. PALL looks similar with a trade up to resistance at the $64.65 mark. A move higher is worth trading up to the $66.50 – 67.75 mark. Watch for clear entry point on the reversal. ONLY ETF Model.

Pattern Setups For Today:

  1. FB – ascending triangle. $24.90 entry on breakout.
  2. TJX – downtrending channel. $50.80 breakout and resistance break.
  3. SJT – $16.10 break from trading range.
  4. RF – Consolidation breakout test. $9.36 breakpoint and test.
  5. MXIM – bear flag. Watch for break lower.
  6. AAPL – bounce off support – resistance $403. Clears on volume look for upside trade.
  7. Follow up on previous posts:
  8. 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 $6.14.
  9. HPQ – Trading range. $25.50 entry.
  10. SJT – Trading range. $16.20 entry.
  11. ETR – Break above the downtrend line. Testing the move higher, entry at $70.50
  12. UNG – support break $19.90 short set up if stays below this level. The set up for downside entry play followed. $19.70 entry was hit. $19.50 stop on UNG or KOLD $84 entry and $86 stop.
  13. KRE – Triangle pattern. $32.90 entry on the move higher. Hit the entry. Use $33.50 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 $269.
  15. KBE – Triangle pattern. Break to the upside trade at $28.50 entry. Watch the downside. Hit new high Thursday and stop at $28.50 on test Friday.

Facebook (FB) Update:

  • Facebook – No positions currently. The sentiment towards the stock has been negative, but an attitude adjustment from the upgrade to a ‘buy’ last week is in play. Found some support at the $22.80 level and is in the process of developing a trading range. Was heading higher until the Fed stalled the move. Let the trading range settle in and we will determine our entry point going forward. The broad market sentiment is weighing on the stock for now and the upside should resume. Move above $24.75 look to add as small position.
  • Added position at $24.75 Friday (1000 shares). Stop is $22.75 for now. A move back above the 200 day moving average we will add to the position.

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.