Trading Notes for Today, July 30th

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. Fed once again gets the credit for the cautious tone of the trading day as they will speak on interest rates on Wednesday afternoon. There isn’t much in terms of expectations or changes from the Fed looking forward. Throw in a negative pending home sales report today and the broad indexes trades slightly lower to start the week. This is the start of a third week moving laterally and we are starting to see negative commentary on the markets? In need of a catalyst if the next leg higher is to materialize. This is why I continue to remain patient as this plays out near term.
  2. Technology is on our watch list for the week as a key sector following a tough week of earnings. XLK is consolidating sideways and holding the 50 DMA. Look for a move to the upside as short term trade with a move above $31.75. Made a move north early in the trading day on Monday, but closed lower… still watching.
  3. Oil is still moving lower and breaking below the 20 DMA. Watching for a test of the $23.25 support on OIL. The dollar is holding at the $22.10 mark (UUP) or does it continue to trek lower on the Bernanke and Fed actions? Gold is still out of favor as it consolidates on low volume trading near the $1340 level.
  4. The S&P 500 Model is updated for Tuesday’s trading. The stops on our positions ares set and we are watching the extend move higher for weakness. We continue to look for opportunities, but content with the portfolio currently. Take it one day at a time. Volatility picked up slightly on Monday and we continue to watch VXX for entry opportunities short term.
  5. The Sector Rotation Model is updated. Added AT&T to the portfolio today on move through entry price. This is a short to intermediate term position. YUM and EEM both are still short of the entry point for now. DBC hit the stop intraday and we took the exit on the move. Still scanning for reasonable opportunities short term.
  6. The ONLY ETF Model continues to take on short term trades offering short term upside. Technology (XLK) was also added on the upside as an opportunity on the test lower from earnings. China is on the watch list as the upside is getting a boost from the government comments on stimulus.  Biotech (XBI) remains on the list from last week and is in position to move higher as well. Be patient with your entries on all trades.
  7. The ONE EGG Model scans are coming up with international ETFs this week along with the metals and mining ETFs. The momentum shift towards these sectors is interesting relative to the outlook near term. Australia (EWA) offers the best set up on the chart and isn’t currently overextended. The combination of the move higher in the two sectors also is attractive considering the number one export in Australia is commodities. Thus, we will watch for the entry today on the trade.
  8. As long at the trend higher continues maintain your positions and manage your stops.

Pattern Setups For Today:

  1. AAPL – Break downtrend line? Ready to move higher. The break of the downtrend is a positive on the upside and confirms the reversal off $385 support. $445 September calls if we hold the move today.
  2. C – Testing $51.30 support. Watch for reversal and entry $52.25.
  3. Refiners are consolidating in trading range patterns. Watch to see if they break higher as oil prices contract. VLO, TSO, WNR, PSX.
  4. Follow up on previous posts:
  5. YUM – Weekly chart 16 month trading range breakout? Move above $74.10 looks interesting with a longer term outlook.
  6. CLF – Bowl pattern breakout? $19.20 was the resistance level cleared. Watch for test of the move and opportunity to add a position in the stock. Target is $23.50. Early test on Monday and follow through higher with entry 19.50.
  7. KEG – three month trading range/consolidation at the low. Break above $6.85 is of interest for trade higher.
  8. CRM – Pennant upside. Nice move from consolidation at $39 and now digesting the move and looking to move higher short term. Gap open turned to selling most of the day. Watch today for upside to resume. $42.75 entry and nice move.
  9. HBAN – Pennant – breakout test $8.55 entry. Regional banks are doing well (KRE). Hit entry and watching upside.
  10. 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. Hit stop on Thursday’s test lower. Still like the upside here, stop was too tight for the volatility in the stock short term.
  11. 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.
  12. XNPT. pennant – trend reversal and set up to break higher. $5.75 entry. Hit entry and watch for follow through on upside. Stop $5.30.
  13. 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 $81.50.
  14. RAX – cup and handle. entry at $42.35. Could fill the gap back towards the $50 mark. Nice break higher and added play. Testing? Nice continuation move on upside. $43.50 stop.
  15. 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. Finally a solid move higher for the trade up with some testing on Wednesday. Manage your risk .
  16. 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 $31 . Getting extended on the upside manage the risk.
  17. 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. Resistance or profit taking? Either way manage the position. $137 target.
  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 $87.50.
  19. SJT – $16.10 break from trading range. hit entry. $16.10 stop. trading sideways still – dividend play. Finally a follow through on the upside and now consolidating again. Watch the risk as markets shift on interest rates. adjust stop to $16.25.
  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 and raising stop to $6.85. Test lower on Friday – honor stop.

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.
  • Earning beat expectations on Wednesday and the stock jumped 29%. Here is where greed versus objective comes into play. This is a long term play and if the gains hold up today in trading the upside gain on the position is tempting. We will now have to design a way of protecting or realizing part of the gain short term. Be patient with the position on the upside as you are on the downside.

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.