Trading Notes for Today, June 17th

What I am watching today and some pattern ideas are below. The Watch List and Play List have been updated for today. Review and exercise 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 S&P 500 index starts the week at 1626. The bounce off the 50 DMA and the trendline from November remains in play. How it follows through this week will be key to the future direction of the index and the market overall.  The focus remains on the Fed and what action they will take or explain following this week’s FOMC meeting on Wednesday. The futures are pointing higher by 12 points in the pre-market.
  2. Treasury bond yields are still a concern as well. Last week the Fed made reference they were not abandoning the bond buying or the $85 billion per month. It helped stall the rise in yields on both the 10 and 30 year bonds. The bigger question now is what they will say following the FOMC meeting on Wednesday and will it be enough to pacify investors? TLT is down 9% from the high and a move back to $118.25 would help calm some of the anxiety in bonds.
  3. Crude oil is higher on the news relative to Syria. The speculation priced into oil is questionable and we have raised our stop as the target was hit on UCO. Let it play out, but understand the reason behind the move.
  4. Japan (EWJ) remain a key part of the global outlook as the yen is rising along with rates on long term Japanese government bonds. A look at the chart shows the volatility due to the uncertainty of direction in both rates and they yen. Still looking at the longer term opportunities in owning the ETF.
  5. Manage your short plays in FXP and EEV as the rally today in Asia is impacting the global markets on hopes of the US Fed continuing to pump money into the system. Raised stops and we will need to manage any gap open accordingly. We may be looking at a positive response to the Fed rumors of last week.
  6. There is still a possibility of a bump off the lows in the dividend assets. Utilities (XLU), REITs (IYR) and stocks (DVY) could be benefactors from the Fed talk. TLT, HYG, LQD and other bond ETFs would benefit as well. Watching to see how they respond to start the week.
  7. Futures are higher to start the trading week. They are up 0.9% currently and that will produce a gap open. Manage your stops accordingly. I want to see if the positive bias will last as trading progresses not only to today, but on the week. There is plenty of noise and speculation and it may be enough on both sides to keep the indexes in a trading range near term.
  8. All eyes will shift to the housing data out this week along with the FOMC meeting. News events will be the driving force behind the market movement and that is likely to keep the volatility alive and well.
  9. Facebook – No positions currently. The sentiment towards the stock remains negative, but an attitude adjustment from the upgrade to a ‘buy’ last week is in play. Found some support at the $22.80 level and bounced on the news.  Held the $23.25 support line thus far and still building a base. We will continue to watch for this to setup and establish any opportunity to buy. Plenty of resistance in the $24.75-25 range on the upside.

Pattern Setups For Today:

  1. XHB – Housing ETF double bottom and break above $30.85 resistance.
  2. IYZ – Telecom ETF double bottom move above $26.40.
  3. RVBD – cup and handle base. Break above $16.40.
  4. Follow up on previous posts:
  5. TJX – broke from the flag pattern at $50.75 entry. Watch for a test of the $50.75 level and move higher. Got the test on Friday. Look for the follow through on the upside today.
  6. LEN – bottom reversal in a rolling range. Move above the 200 DMA entry and target at $44.
  7. XHB – bounce double bottom. $31 entry range. target $32.50
  8. AMD – extended flag consolidation. If negative sentiment in tech continues will break lower as short trade.
  9. ITC – descending wedge, play entry at $89.20. Small Cap Utility stock. Still worth watching for now. If pulls back to the bottom of the range the bounce off the low would be the play. At bottom of range on Wednesday? Added trade on Thursday (stop $86). Target $90.
  10. CRAY – Cup breakout at $18.05, initial target $18.85 and then 20.20. Still moving in a positive direction.
  • 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 pla