Trading Notes for Today, July 2nd

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 still as the rally on Monday keeps the tone positive short term. Do we test the lows or go higher? The futures are heading higher again as investors continue to buy into the upside of the market. The resistance level at 1620-1630 is what we are watching today on the S&P 500 index.
  2. The S&P 500 Model is updated to address the outlook. I am still looking for a test or continuation of the downside trend. Monday had other ideas as buyers continued to push the upside of resistance. The late day give back is still sign that conviction is missing in the move thus far. The Watch List is updated relative to Monday’s activity and we continue to look for a ┬áretest of the lows. ┬áBoth XLU and IYR sold lower as rates continue to come into question short term.┬áThe 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. VXX was also updated relative to the entry point. Still taking a cautious approach looking forward.
  3. The Sector Rotation Model is updated to address this weeks trading plan. The Watch List is updated to reflect Monday’s trading. The short term scans show only 6 ETFs that show negative momentum and 18 ETFs with positive momentum. This has shifted significantly over the last week, but as you can see the lack of clarity on leadership is impacting the opportunities to put money to work. We have to be patient for now. Small Caps (IWM) remain the most positive among the major indexes currently. Can they provide the necessary leadership for the broad markets is the question.
  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 added the leveraged ETF TMF today to capture the move. I also added IWM today as small caps continue to look positive. Raised the stop on QLD to protect against any reversal short term. Still managing the risk of the short yen trade as well.
  5. The ONE EGG Model has been set on the short play of the NASDAQ and is near the entry point. Still no activity that favors the trade short term. This is a leveraged ETF and expect some volatility. This is the same trade setup 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 and added to the move on Monday gaining 1.7%. 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. Gapped higher and never gave us a sound entry point. ONLY ETF Model.
  8. Small Cap stocks continue to lead and they are the one sector holding out hope for an upside move. This is the one index showing positive signs without the intraday give backs on Friday and Monday. IWM entry at $98.75 is attractive if you missed the entry on Monday at $97.70.

Pattern Setups For Today:

  1. URBN – V bottom. Break above resistance at $40.53 and target of $42.65.
  2. IEF – bear flag. The downside play for the bond is set up short term. PST is the inverse fund with the same setup (bull flag). 29.75 entry.
  3. FXE – bottom reversal. $129.50 trade.
  4. Follow up on previous posts:
  5. FB – ascending triangle. $24.90 entry on breakout. added test.
  6. TJX – downtrending channel. $50.80 breakout and resistance break.
  7. SJT – $16.10 break from trading range.
  8. RF – Consolidation breakout test.┬á$9.36 breakpoint and test. gapped higher on Monday.
  9. AAPL – bounce off support – resistance $403. Clears on volume look for upside trade. $405 August call option taken on Monday $16.50.
  10. 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.
  11. 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. $19.15 stop on UNG or KOLD $84 entry and $86 stop.
  12. KRE – Triangle pattern. $32.90 entry on the move higher. Hit the entry. Use $34 as the stop on the trade. Achieved the target — raise stop and manage the trade.
  13. AMZN – Breakout test. $270 was the break from the consolidation range. Took the trade entry $273. (hit entry). Stop $273.
  14. KBE – Triangle pattern. Break to the upside trade at $28.50 entry. Watch the downside. Hit new high and stop at $28.75.

Facebook (FB) Update:

  • Facebook – The sentiment towards the stock has been shifting as seen in the found support at the $22.80 level and is in the process of moving to the top of the trading range. 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 plac