Trading Notes for Today, May 29th

Got our answer on short plays on Tuesday. The buyers are still ready to step in and bid up stocks.

Sectors to Watch:

  1. Utilities are moving lower. Interest rates have been the catalyst and the downside looks ready to move to the $38.20 level for now. $37.75 may be the true support.
  2. Volatility retreats to 13.5, but closes at 14.5? The give back in the afternoon prompted a move higher. Is it enough to invite some selling? VXX is still on the table currently as a trade.
  3. China (FXI & GXC) bounced 1.8%? Not convinced on the upside opportunity? Watch to see if we fill the gap left by the move on Tuesday.
  4. Gap lower on TLT as yields spike higher. TBT hit the $66.50 entry level for additional trades. Looking for a test of the move, but the momentum remains with the upside.
  5. Crude has moved back to the $95 level, but inventory data is out this morning and it is being watched closely for higher demand. Summer is here and that will have an impact… maybe. DTO at $41.85 ish looks attractive if the negative sentiment builds from the inventory news at 10 am.
  6. Facebook – We have exited our position and the next support is I am selling and buying back as the next support is at $23.30. The August 24 Puts @ $1.60 are interesting, but don’t offer the risk/reward I would like. Thus, if we get any bounce back towards $24.50 we will look at buying the contracts. Be patient here and don’t jump to any conclusions. The better trade may be to wait for support and then go long the stock.

Pattern Setups For Today:

  1. The futures are pointing to the downside early, but we know how that has played out of late.
  2. PALL – Follow through on move higher and break above $73.85 resistance. $76.50 target.
  3. SNSS – Break from the trading range. Attempted on Tuesday. Looking for follow through.
  4. HOV – Break from trading range or plateau above $6.20. Homebuilders are attempting to break higher as well.
  5. Follow up from Friday’s List:
  6. RRC – Wedge consolidation breakout, test and move back above the 200 DMA. Broke the downtrend line.
  7. PACB – Break above the top the trading range. $2.65 (gapped higher and never gave a good entry) still watching the trade.
  8. TBT – break from consolidation if yields continue to rise short term. $66.50 entry.
  9. QCOM – test of support at the 200 DMA. Held now looking for follow through on the upside. $64.65 level for entry on the upside. Up early then tested lower.
  10. SKYY – tested lower with support at $21.35. Look for move back above $21.73 on upside as entry. Hit the entry, place stop at $21.30.
  11. CHK – Tested the breakout held and is ready to move higher? $23 target. Progressing nicely, raise your stop.
  12. VVUS – Break above $13.75 cup and handle. In the drug sector as well. Solid move higher and confirmation. Manage the position relative to the time horizon.

Still plenty of positives in traders minds. Let’s watch to see how this plays out as the buyers push their beliefs.  Watch, protect against what isn’t working and add to what is, don’t fight the trend.