Trading Notes for Today, June 19th

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 above resistance at the 1648 level on Tuesday to put the index in position to retest the previous high.  How it follows through this week in reaction to the FOMC meeting will be key to the future direction of the market overall.  The focus remains on the Fed, but what actions the Fed takes or explains on Wednesday is where the focus remains.
  2. Treasury bond yields are still a concern to the markets as they jump to quick. Comments from the Fed presidents helped stall the rise in yields over the last week plus, but it will key to keep rates steady following the Fed meeting today. Watch TLT to develop a trading range short term.
  3. Crude oil moved above the $97.50 resistance on the 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. A test of the September high at $100.50 is the short term target.
  4. Japan (EWJ) bounced following all the negative sentiment as a result of the Bank of Japan cutting stimulus. Bond yields have risen and in turn, spooked stocks. As things settle stocks should resume their move to the upside. The yen has gained as well against the dollar. If the nerves continue to calm a short play on the yen would be in order (YCS). Added a position in EWJ on Monday.
  5. Manage your short plays in FXP and EEV with the bounce in Asia impacting the positions. They are both testing near term support and we have tightened our stop if the buyers step in to shift the trend.
  6. There is still a possibility of a bump off the lows in the dividend assets. Utilities (XLU) and dividend stocks (DVY) both managed to bounce of the lows. Watch to see how this unfolds. Added XLU on Monday. Worth scanning the stocks for the leadership if the bounce continues.
  7. The futures are trading flat currently. I expect the market will trade higher into the FOMC decision and then react to the Bernanke comments good or bad. Nothing is for sure when it comes to his comments and I am interested to see how investors react both after the meeting and overnight. No gambling on the comments, just let the market decide on direction and then move.
  8. The housing data was positive on sentiment and missed on new starts and permits Tuesday. This is an interesting study to dig into and look at the leadership from XHB and ITB. The homebuilders are not doing as well as the suppliers and benefactors. I would look for the sector to move sideways, but the watch the parts as they develop specific leadership.
  9. Facebook – No positions currently. The sentiment towards the stock has been 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.  Pushed against the resistance at $24.60 on Tuesday. This is shaping up well for a upside play at the $24.75 level on some volume.

Pattern Setups For Today:

  1. MCHP – inverse head and shoulder pattern with break above $38.
  2. NU – double bottom break above $42.55.
  3. PMCS – uptrending trading range. break above $6.27.
  4. Follow up on previous posts:
  5. PCG – double bottom break above $45.40. Made the move stick Tuesday. with entry at $45.50.
  6. ETR – wedge breakout at $69.90.
  7. WPX – flag breakout at $19.75. Nice follow through and entry at $19.80 on Tuesday.
  8. RVBD – cup and handle base. Break above $16.40. Made the move on Tuesday.
  9. LEN – bottom reversal in a rolling range. Move above the 200 DMA entry and target at $44.
  10. XHB – bounce double bottom. $31 entry. target $32.50
  11. AMD – extended flag consolidation. If negative sentiment in tech continues will break lower as short trade.
  12. 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.
  13. CRAY – Cup breakout at $18.05, initial target $18.85 and then 20.20. Still moving in a positive direction. Nice pop on Monday, took half off on Tuesday at $20.70 and raise stop to $20.
  • 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.