Trading Notes for Today, June 18th

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 moved back to resistance at the 1648 level.  The intraday volatility was prompted by an article in the Financial Times, but the index recovered into the close.  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, as seen in the response to the article, but what actions the Fed takes or explains following the FOMC meeting on Wednesday is where the focus remains. The futures are positive, but we will watch into the open.
  2. Treasury bond yields rose with the optimism in trading on Monday. They are still a concern to the markets if they jump too quickly. Comments from the Fed presidents helped stall the rise in yields on both the 10 and 30 year bonds, but the volatility is still in play along with our positions in TBF. The bigger question now is what they will say following the FOMC meeting on Wednesday and will it be enough to pacify investors?
  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. Comments at the G8 meeting relative to oil prices rising to high and hurting the global economy had little effect, but that is something to watch as well relative to oil prices.
  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. Added a position in EWJ on Monday.
  5. Manage your short plays in FXP and EEV with the bounce in Asia impacting the global markets. They were down slightly overnight as everyone looks to the US Fed and if they will continue to pump money into the markets. Got through the early drop in the short positions on Monday, but still need to manage the downside.
  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. All did well until the article hit the headlines and they retraced the gains. Still added a position in XLU and we will manage the volatility. Digging into the ETF shows some positive pattern setups for stocks.
  7. The futures are positive currently, but I still expect volatility as investors are nervous. VXX is still attempting to move higher as a reflection of investor uncertainty. I don’t expect the Fed to be clear about their specific actions on Wednesday, and that leaves the volatility in play going forward on speculation.
  8. The housing data out today will offer some distractions and opportunities as we saw a bounce in XHB and ITB on Monday. The entry was hit on XHB posted below in the pattern list for Monday. Look for a move back to the previous high at $32.50.
  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.  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. The triangle consolidation pattern is negative relative to the chart, but I am still looking for a base to develop short term.

Pattern Setups For Today:

  1. PCG – double bottom break above $45.40 attempted on Monday.
  2. ETR – wedge breakout at $69.90.
  3. WPX – flag breakout at $19.75.
  4. Follow up on previous posts:
  5. RVBD – cup and handle base. Break above $16.40.
  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. 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. Nice pop on Monday, take half off and raise stop to $19.25.
  • 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.