Trading Notes for Today – July 23

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. Earnings continue to be mixed relative to revenue and and bottom line earning per share. The revenue isn’t growing and for me that is a concern, not to mention that margins are shrinking. That has not matter to this point, but I am watching to see how the guidance numbers look and they are not improving either. The futures are up slightly as we head towards the start of trading. Netflix was down more than 4% after-hours on earnings as new subscribers fell short of expectations. The stock was priced for perfection. Watch to see if it impacts other stocks in the sector.
  2. Is the market getting overbought? Technically yes, but that doesn’t mean it go higher despite the signals. The emotions of wanting to own stocks is in play. That said, we all know that the higher it goes the worse it will end. The key is to be cautious, manage your stops and look for points to take some off the table and keep some liquidity.
  3. Gold broke higher from the base gaining more than 3% on the trading day. The miners were up more than 6% and this could be the short squeeze we were discussing for the metal starting. Watch for the opportunities if the upside continues.
  4. The S&P 500 Model is updated for Tuesday’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 to our outlook and we continue to stay focused. Take it one day at a time. Don’t be greedy at this point just take what the market gives and manage your stops.
  5. The Sector Rotation Model is updated. Looking for opportunities that make sense relative to the objective of the model, but the valuation don’t match the outlook, be patient and don’t trade everything, just for activity sake. DBC holding as gold was higher, but oil was lower. Gold may see the short squeeze impact as stated above. The commodities were showing some upside, but tested on Monday. Still watching. Housing data was solid, but didn’t produce much in terms of opportunities. Still digging through the sector. Europe is moving moving higher and starting to play catch up with the US. Worth watching short term. EEM is set up to breakout at $40?
  6. The ONLY ETF Model continues to take on short term trades offering short term upside. Still watching for the NASDAQ trade to come back if the rally continues. We continue to adjust stops and 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. Added GDX to the watch list. Still looking at risk/reward of the set ups on trades.
  7. The ONE EGG Model was looking to play downside in the NASDAQ 100, but the gap open left no room for the entry. This weeks scans turned up some interesting opportunities, but very extended on the upside. I am watching risk/reward here as it is extended.
  8. As long at the trend higher continues maintain your positions and manage your stops.

Pattern Setups For Today:

  1. HBAN – Pennant – breakout test $8.55 entry. Regional banks are doing well (KRE).
  2. NVO – double bottom breakout. Looking for the upside in gold to continue. This is a trade on the miners. GDX broke higher as well. $2.47 entry.
  3. NIHD – flag – trend reversal in play and a break from the pattern higher would confirm the reversal. Watch for entry at $8.10.
  4. XNPT. pennant – trend reversal and set up to break higher. $5.75 entry.
  5. Follow up on previous posts:
  6. XHB – homebuilders triangle pattern. Data out this week on housing and worth trading if the news is positive. $31.15 entry. News was mixed… still watching for now.
  7. 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.
  8. 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.
  9. 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? Watch for the upside to continue.
  10. 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.
  11. 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.
  12. GLD – double bottom – looking for break above the $124.50 mark. Moved through the entry added. Looking for move to $130. Big move on Monday! Stop at $125.10.
  13. 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. Hit stop on balance.
  14. 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.
  15. C – V bottom break above resistance at $50.50. Added. Nice move on earnings. Held the move higher. Stop raised to $52.
  16. 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.
  17. 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. good move on Monday.
  18. 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.
  19. COST – Reverse head & shoulder pattern. Break above $112.50 entry. Hit entry. Nice upside follow through and raised stop to $116.50.
  20. TJX – down trending channel. $50.80 breakout above resistance ($50.90 entry). Moving higher. Stop $52. Hit Stop Monday. 
  21. 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.
  22. AAPL – bounce off support – resistance $403. Hit all stops on Apple. Great trade though.
  23. 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 and raising stop to $6.78.
  24. 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. Small bounce on Monday. 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.