Trading Notes for Today, June 28th

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 heading into the last trading day of the month. The question today is will there be more window dressing for portfolios before the test of the low on Monday? We will have to be patient today to see how investors see it going forward.
  2. The NASDAQ 100 bounced off the 2810 support and hit the 2915 resistance on Thursday. Attempted to make a move back towards the 50 DMA, but stalled. For the second day in a row the index gapped open and failed to move from there. Setting up for a test of the low technically. The bounce trade cleared $70.20 Tuesday and is moving towards the initial target of $72.23.  The stop is the entry point. If the upside is to make it past the resistance points we need some positive news or the short term move will have run its course.
  3. The S&P 500 index bounced closed at resistance of the 50 DMA and the 1610 level. The downside test is sill in play based on the current activity. The Fed has done nothing to convince investors they are not going to cut stimulus. Watch for an early push higher today and a test of the move intraday. How the markets respond will be telling on the day and going forward. If we move above the 1628 level the upside will be more convincing short term.
  4. China’s troubles are far from over, but it has worked back to resistance on FXI to $32.76. The downside risk is far from over and any upside may offer a entry point to re-establish or short play in the country. We could see a bounce back to the $33.50 mark and then the selling resume.
  5. The 30 year Treasury bond broke below the March 2012 low. TLT is building a short term bottom and could be setting up for a bounce off the newly minted lows. The Treasury auction on Thursday was positive and helped the bonds find some more support. If we put together a short term bounce it is not likely to be big, unless the Fed intervention is bigger than believed currently. We did see an attempt at a bounce to $110, but we have to let this settle. There may be a small trade, but the key is for the tension to ease towards bonds if stocks are to continue any type of move higher.  The trade in bonds may be more in the LQD or HYG type ETF.
  6. Crude oil moved back above $97 on Thursday and closed at $96.77 with futures higher today. The demand side has been weak for some time, but has not produced any major selling. The stronger dollar could create a delayed reaction from the market and move lower, but it has remained strong.  I have been expecting a downside play to set up, but it has not materialized to this point.
  7. Gold gapped lower and the selling resumed again. Now the sentiment is it has to bounce? It doesn’t “have” to do anything, but the towel tossing has begun with will give a climax move and reversal. As we stated in yesterday’s notes, unless someone breathes life into the price of gold, not much upside to like and the downside may accelerate. $1180 is the next level of support. Watch as we closed at the $1200 mark on Thursday.
  8. Futures are showing a slightly positive open today. We are entering the test zone for the bounce. The 50 DMA and the previous uptrend line are just ahead. This is where we are looking to build short positions again if the bounce fails to advance. It isn’t all going to unfold today, but the process is moving forward. Remember this is a belief not a fact, the market has to validate the belief going forward. Promises to be an interesting day.

Pattern Setups For Today:

  1. 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 today.
  2. HPQ – Trading range. $25.50 entry.
  3. SJT – Trading range. $16.20 entry.
  4. ETR – Break above the downtrend line. Testing the move higher, entry at $70.50
  5. Follow up on previous posts:
  6. UNG – support break $19.90 short set up if stays below this level. The set up for downside entry play followed through on Thursday. $19.70 entry was hit. $19.50 stop on UNG or KOLD $84 entry and $85.50 stop.
  7. KRE – Triangle pattern. 32.90 entry on the move higher. Hit the entry on Tuesday. Use $33.50 as the stop on the trade. Achieved the target and moving higher at this point raise stop and manage the trade.
  8. Bottom reversals were the trades this week. QQQ is a good example with the intraday low hitting the trendline as support and then a bounce back to $69.73 on the close. If it hits $70.20 Tuesday it would provide an upside trade on the bounce (1-5 days) the target is $71.80 on the bounce trade, which came close on Thursday (stop is $70.50). I would take profit today if close again or hits.
  9. AMZN – Breakout test. $270 was the break from the consolidation range. Took the trade entry $273. (hit entry on Tuesday). Back to struggling again and stop is set at $269.
  10. KBE – Triangle pattern. Break to the upside trade at $28.50 entry. Hit on Wednesday, watch the downside as this unfolds. Hit new high Thursday and stop at $28.50.

Facebook (FB) Update:

  • 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 is in the process of developing a trading range. Was heading higher until the Fed stalled the move. Let the trading range settle in and we will determine our entry point going forward. The broad market sentiment is weighing on the stock for now and the upside should resume. Patience for now. Move above $24.75 look to add as small position.
  • Add position at $24.75 today if holds above the entry

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.