Trading Notes for Today – July 24th

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. Markets closed mixed with the NASDAQ closing lower again on Tuesday at 3579 and testing the first level of support. The S&P 500 index closed down 3 points? Not any big selling on the day. The upside remains fully in play and we will continue to hold until there is reason to shift gears.
  2. All hail Apple! The great and wonderful… you get the point. The company earnings beat top and bottom line expectations finally after a year of misses. However, the clarity looking forward wasn’t as simple to follow. Regardless the stock was up more than 4% after-hours. That is lifting the NASDAQ after falling to support on Tuesday.
  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 to take place. Watch for the opportunities if the upside continues going forward.
  4. The S&P 500 Model is updated for Wednesday’s trading. We managing the 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. I added SH to the watch list as the downside could be a short term trade going forward. 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. The global markets are playing catch up with the US markets and there are some interesting developments of late with Europe on the move again as the euro gains strength and the dollar weakens. Thank you Mr. Bernanke. Worth watching short term. EEM set up to breakout at $40 and followed through on Tuesday? Added to the watch list today for a follow through on the upside.
  6. The ONLY ETF Model continues to take on short term trades offering short term upside. Took a position in GDX as small test early and entry at $27.50. Gold is looking ready to trend higher short term. Yesterday we were watching for the NASDAQ trade to the downside (egg model), but the challenge is the sentiment on the upside for the overall market. Apple’s earnings will turn the index higher again today. We continue to adjust stops and to manage the risk of the market short term. Biotech reversed, but could still break on the upside, be patient with the forward guidance.
  7. The ONE EGG Model was looking to play downside in the NASDAQ 100, but the gap higher on Friday left no room for the entry. The close lower on Tuesday was interesting as it is right on the entry point for the short play. With the earnings news from Apple after-hours the futures are higher and we will not be near the entry as we start trading today. This weeks scans turned up some interesting opportunities, but very extended on the upside. I am watching risk/reward here as it is extended and I don’t want to take on unnecessary risk.
  8. As long at the trend higher continues maintain your positions and manage your stops.

Pattern Setups For Today:

  1. GPN – Break from consolidation at $48.90. Continuation of the upside move with test of the entry near $49… don’t chase the upside. 49.40 max entry. Earnings due on July 25th (tomorrow)
  2. CRM – Pennant upside. Nice move from consolidation at $39 and now digesting the move and looking to move higher short term.
  3. Follow up on previous posts:
  4. HBAN – Pennant – breakout test $8.55 entry. Regional banks are doing well (KRE). hit entry and closed lower.
  5. NG – 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. Moved through the entry in early trading and then gained 15% on the day. Nice trade.
  6. NIHD – flag – trend reversal in play and a break from the pattern higher would confirm the reversal. Watch for entry at $8.10. Moved through the entry and reversed to close lower on the day. $7.40 stop.
  7. XNPT. pennant – trend reversal and set up to break higher. $5.75 entry. Hit entry and still hitting resistance. Watch for follow through on upside. Stop $5.30.
  8. 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.
  9. 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. Mixed earnings report after-hours… Watch early and adjust stop if you like the outlook short term. I am exiting at $35.40 on the trade if doesn’t hold.
  10. IHI – Breakout test. The break from the trading range tested and a follow through on the upside. The entry was $81. Moved higher with nice follow through. Move stop to break-even at $81.
  11. RAX – cup and handle. entry at $42.35. Could fill the gap back towards the $50 mark. Nice break higher and added play. $42.35 stop at break-even. Testing? Watch for the upside to continue on solid move Tuesday.
  12. GXC – China – bottom reversal. Resistance at $66.30 and added on the move through this level. Watch the volatility in the trade as China is dealing with slowing economic data. Stop 66.50. Watch for follow through or take exit. Finally a solid move higher for the trade up 2.4% on Tuesday and move stop to break-even.
  13. 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 $30.40 or break-even now. Getting extended on the upside manage the risk.
  14. 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. Held gains on Tuesday… watch for $137 target.
  15. 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. HIT STOP Tuesday with 4% gain.
  16. C – V bottom break above resistance at $50.50. Added. Nice move on earnings. Held the move higher. Stop raised to $52.
  17. KMI – break above resistance at $38.90 (V bottom reversal). added on the follow through upside. Stop now $39 or break-even. rolling top in play. HIT STOP – break-even
  18. ABBV – triangle consolidation. Break above the $44 level positive upside. Got entry on breakout at $44. Tested lower and keeping the stop at $44.
  19. 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.
  20. COST – Reverse head & shoulder pattern. Break above $112.50 entry. Hit entry. Nice upside follow through and raised stop to $117.
  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 break-even.
  22. 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.
  23. 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 off near term support. Watch patiently as this is a long term trade.

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.