Trading Notes for Today, July 22nd

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 Sectors to Watch:

  1. Negative earnings couldn’t stop the push higher for the broad markets in Friday. However, this is a new week and and a new opportunity.Housing will be in focus on the economic side of things and the NASDAQ will look to get back on track following the earnings mishap from Microsoft, Google and others. The futures are quite as we start the week, but that could change into the open.
  2. The S&P 500 Model is updated for Monday’s trading. We have adjusted stops on our positions and watching to see how this plays out short term. We are more than 90% invested and we will look at taking profit if the trend higher starts to test short term. No change overall and we continue to stay focused and taking it one day at a time. Don’t be greedy at this point just take what the market gives and manage your stops.
  3. The Sector Rotation Model is updated. Hit stop on SMH as Intel and other NASDAQ components miss on revenue or earnings. . DBC holding as both gold and oil are attempting to follow through on the upside. Gold was up modestly on Bernanke comments last week, but still needs to find some sustainable momentum. Energy stocks have picked up momentum on the price of crude rising and gasoline has moved higher equally. Watch for a continuation of the upside from the flag pattern on UGA. Natural Gas is attempting to break from the current base built over the last three weeks. Natural gas has developed a three week based and we moved above $20 resistance and held, watch for trade opportunity.
  4. The ONLY ETF Model continues to take on short term trades offering short term upside. We closed the trade on QLD as we hit the stops on Friday. The downside play on the NASDAQ could develop and is worth watching into the trading week.  We adjusted stops and continue to manage the risk of the market short term. Trade setup on XBI with a bull flag pattern and continuation of the upside. Regional banks cleared resistance at the $36.20 level and heading higher on solid earnings reports. Watching to see how the week starts before committing further to the upside.
  5. The ONE EGG Model was looking to play downside in the NASDAQ 100, but the gap open left no room for the entry. Still watching coming into the trading week, but not likely to happen short term. This weeks scans turned up some interesting opportunities, but very extended on the upside. I am watching to see how we open the week and then we will post what direction we want to go.
  6. 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. XHB – homebuilders triangle pattern. Data out this week on housing and worth trading if the news is positive. $31.15 entry.
  2. Follow up on previous posts:
  3. T – AT&T is in a trading range again. $36 would clear the resistance and the 50 DMA. Watch to see if we can regain momentum on the upside. Reversed selling on Friday. Stop is $35.40 for now.
  4. IHI – Breakout test. The break from the trading range tested on Tuesday and sets up a follow through on the upside. The entry is at $81. Hit entry and moved higher with nice follow through.
  5. RAX – cup and handle. entry at $42.35. Could fill the gap back towards the $50 mark. Nice break higher and added play. $42 stop. Testing?
  6. 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. Added trade. Stop 65.60. Watch for follow through or take exit.
  7. KBE – flag on test of the break higher and Bernanke. Looking for the continuation of the upside following the test. $30.40 entry point. Set stop at $29.90 for now. Looking to hold the move higher today.
  8. GLD – double bottom – looking for break above the $124.50 mark. Moved through the entry on Tuesday. Looking for move to $130. Stop at $122.40 – bounced back from test lower.
  9. YHOO – Break above trading range. 27.30 level. cleared and testing added small position. Tested support at $26.70 Earnings issues after hours… watch the open. Great upside follow through on Wednesday. Took 1/2 off on Friday and raised stop to 28.70 on balance.
  10. AMGN – Break from trading range. confirmation and follow through $103 test and move for entry and added the position. Stop $107.50 on the big move Friday. Watch and take profit on 1/2 if test.
  11. HPQ – breaking above $25.50 consolidation trading range. $26 entry on Thursday. Forming flag opportunity to add on upside if you choose. consolidating at the high… look for follow through on upside and set stop at $25.40. HIT STOP Friday.
  12. C – V bottom break above resistance at $50.50. Added on Friday. Nice move on earnings. Held the move higher. Stop to breakeven at $50.50 and watch.
  13. KMI – break above resistance at $38.90 (V bottom reversal). added on the follow through upside. Stop now $39 or breakeven. rolling top in play.
  14. ABBV – triangle consolidation. Break above the $44 level positive upside. Got entry on breakout at $44. Tested lower and keeping the stop at $43.50.
  15. IHF – Trading range near the high. Broke above $85.15 ($85.25 entry). This is the healthcare providers ETF. The sub-sector is leading the healthcare sector currently. Holding the gains for now. Move stop to $86.50.
  16. COST – Reverse head & shoulder pattern. Break above $112.50 entry. Hit entry. Nice upside follow through and raised stop to $116.50.
  17. TJX – down trending channel. $50.80 breakout above resistance ($50.90 entry). Moving higher. Stop $52. Digesting the move.
  18. SJT – $16.10 break from trading range. hit entry. $16.10 stop. trading sideways still – dividend play. Finally a follow through on the upside, adjust stop to breakeven.
  19. AAPL – bounce off support – resistance $403. Clears on volume look for upside trade. $405 August call option taken $16.50 (Stop $27). We sold half  of the trade to lock in gains and let the balance play out. The test bounced and closed above $420 and we added to the play ($422)… nice move to the upside ($420 August Calls at $15.10, stop $17). A move back below the $422 level is exit on all positions.
  20. PMCS – Trading range breakout. $6.25 is the top end of the range to break above. Added position. Entry $6.45. Held move higher, watch and manage the stop. Nice gain to end week and raising stop to $6.78.
  21. AMZN – Breakout test. $270 was the break from the consolidation range. Took entry $273. Stop raised to $298. Big move on the upside and need to protect the gains. Watch for exit if the selling gains momentum.

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 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.
  • Tested Friday as the ripple effect of the earnings data in the sector hit the stock. Watch patiently.

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.