Trading Notes for Today – June 3rd

The new month of trading begins with plenty of economic data to swing sentiment. The manufacturing data on Monday will set the tone for the week. The jobs data to end the week will give some ideas on things are progressing economically. My guess is not much has changed and  it remains slow, but steady.

Watch sentiment this week. We ended on a sour note last week, but there is plenty of data out that can change it back to a positive swing in the market. The buyers were in hiding on Friday, but they are not out of it yet. I am not attempting to sway you on the positive side at all, but we have seen this dance before. Proceed with caution, take what the market gives and don’t over think or stay you welcome.

Sectors to Watch:

  1. China PMI out this morning at 49.2 for May and worst since October. The news from China continues to raise questions looking forward, but the short play in FXP should benefit today from this data.
  2. China’s news weighing on Europe, but they have their own reports to worry about today. Anything positive out of Europe may send their stocks higher. This is an area that looks decent on the upside. IEV, tested $41.60 support on Friday, but some good economic news could help push the index higher. Watch.
  3. Gold failed to break higher on Friday? Watch to see how it responds today. Looking for move higher.
  4. Big moves lower in the interest sensitive sectors last week. Looking for a base or support to build. That would mean interest rates settle at the current levels. Watch the 30 year bond to hold at 3.3%.
  5. Semiconductors (SOXX), Banks (KBE), Short NASDAQ 100 (QID), Short Emerging Markets (EEV) and Corn commodity (CORN) are updated and added to the ONLY ETF Watch List.
  6. Short Natural Gas (KOLD), Short NASDAQ 100 (PSQ), Bank of America (BAC) are updated and added to the Sector Rotation Model.
  7. S&P 500 Model hit stops on most positions on Friday. I have not added anything new on the upside to the watch list as I want to see how the sentiment plays out from Friday. SH – short play is on the list if the downside continues the momentum. The entry is below the close on Friday as I would like to see a test of the move and then confirmation the downside is really in play. Don’t force an entry on the short play.
  8. Japan continued lower on Friday. Still looking for support to be established along with a bounce back. I still like the upside opportunity. EWJ has support at $10.85 to $11.05 short term? Could be a trading opportunity back to the high near $12.40.
  9. Volatility (VIX) jumps to 16.3 on Friday’s selling. Watch today for follow through or retreat. If you like to trade the VIX… SVXY would benefit is the negative sentiment subsides.
  10. Facebook – No positions currently. The WAZE rumored buyout is dead, the sentiment towards the stock remains negative, but it did manage to bounce off the low at $23.36. Looking for a base or range to be established short term. Time to be patient and let some direction develop before adding any position.

Pattern Setups For Today:

  1. Friday’s setups are still valid heading into trading today.
  2. CRAY – Cup breakout at $18.05, initial target $18.85 and then 20.20.
  3. EMC – gap breakout test. $24.50 test and move higher.
  4. PKT – cup breakout $14.80 fill the gap up to $15.96 – $16.77.
  5. GNW – break from consolidation to new high. $11.05, target $11.70.
  6. MPC – 84.60 entry on break above the consolidations resistance. reverse head and shoulder pattern setup.
  7. HOV – Break from trading range or plateau above $6.20. Homebuilders are attempting to break higher as well.
  8. Follow up from Yesterday’s List:
  9. PALL – Still in play on break above $73.85 resistance. $76.50 target.
  10. PACB – Break above the top the trading range. $2.65

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.