Trading Notes for Today – May 17th

Market fades giving back the gains from Wednesday on the S&P 500 index. The NASDAQ closed higher thanks to Cisco and the Networking stocks. Option expiration today and that can create some volume, but expecting the market to run in place.

Earnings from WalMart isn’t going to help the retail sector today. XRT fell 1% on Thursday without the news.

Do we worry about the Fed? Or, do we ignore the idol threats to cut back on stimulus? Based on the economic data they are not likely to do much of anything other than talk, but it will continue to move bonds and stocks as the speculation and decide the best approach.

Sectors to Watch:

  1. Gold accelerated lower following through on the break of support. GLL is now in play again and DUST is showing the weakness in the metal. both are leveraged, but the upside in the short ETFs are positive. ZSL accelerating as silver remains weak as well. The downside is in play… give this some room to push lower.
  2. TLT bounced? The yield bounced after a strong sell off from the bond. Watching to see if the buy opportunity as a trade is valid. Cleared $118.25 with sights of $120? Tighten stop on TBT to $63. Sell at the open if the rally in the bond continues. That will show the Fed worry about QE growing.
  3. OIL – short play was developing nicely, but reversed on Thursday? Manage the DTO trade if we move higher today. Futures are flat and we should be fine, but be aware of your surroundings on the trade.
  4. Technology broke higher on the Cisco earnings, but not looking overly strong on the move. Watch to see if this holds. We didn’t add to the position on the move, but there is still room on the upside.
  5. Utilities (XLU) – Still managing this bounce off support. Watch for the upside opportunity.
  6. Energy – (XLE) tested the breakout at $80. No real follow through on the move higher. Watch the test at this level. If crude moves lower as stated above it will impact the short term direction in XLE.
  7. Facebook – The break of support at $26.50 on Thursday is a negative. Watch $25.25 as support and a exit on a break below $25 as it would violate the trading range. I will have the new page up this weekend.
  8. Pattern Setups For Today: 1) IGN – Gap breakout on Cisco news. Watch for test of $28.75 level and continuation higher. 2) TMF – The bounce in treasury off the low is valid up to $69.50. High risk trade with the leverage. 3) FOSL – Flag that should be bullish, but retail struggling. Fill the gap? 4) KSS – breakout from channel on earnings. Gap left could get some test as retail is struggling.  5) KOLD – short on natural gas on break lower. Entry $18.38 6) AAPL – building a trading range and support at $420.. bounce? Got the initial bounce for the trade. Watch for trade off the support test?

Still plenty of positives in traders minds. The adjustments on Thursday were not significant enough to get the attention on the sellers at this point. Watch, protect against what isn’t working and add to what is.