Trading Notes for Today, May 30th

Choppy markets make it difficult for short term clarity. This is not a time to be pontificating on market direction as the choppy activity is caused by a uncertainty looking forward.

Sectors to Watch:

  1. Short play on the NASDAQ. The index remains a big question mark and could offer the greatest downside play as the risk of the index is elevated. Watch for downside play in QID. On Watch List for ONLY ETFs. Same list has DXD, short Dow and DTO, short oil (hit entry on Wednesday).
  2. Agriculture commodities (DBA) are moving as a result of corn gaining on the upside. CORN broke higher the last two days and looking for a test and follow through on the upside.
  3. Emerging Markets (EEM) The sector is not reacting well to the global concerns on growth. Thus, a short play with EEV may pan out short term as the $23 level entry was hit on Wednesday.
  4. China (FXI or GXC) is testing lower again! The one day bounce ended quickly. FXP is looking attractive on a break above 50 DMA. $20.40 entry look positive. China still looking weak.
  5. EAFE index breaking lower and setting up a potential short trade as well. The weakness in the global markets is starting to come back to roost. Watch the downside play by short EFA.
  6. Europe joined in on the party as well on the downside. IEV pulled back and is testing support. EPV at $21.90 or $22.30 is attractive if the downside in Europe continues.
  7. Volatility runs to 15.5 early, but retreats to 14.8 on the close? Is it enough to invite some selling is the question lingering? VXX is still on the table currently as a trade.
  8. Facebook – We have exited our position and 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. Didn’t get the pullback Wednesday needless to say, but the puts were up 30% on Wednesday! The downside remains in play for now. If support at $23.30 doesn’t hold short interest will jump as everyone likes to kick a stock when it is down. The WAZE rumored buyout lost Facebook as a potential suitor… according to rumors. That has the stock up nearly 60 cents premarket? As I stated patience here as the uncertainty around the stock works out.

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. (still watching)
  3. AAPL – Wants to break higher? Look for a move above the $445 level up to $465 resistance. July 445 calls.
  4. NFLX – Test of support at $212.70. Breaks fill the gap? Short play setup. Disappointing news on programing has sent the stock lower short term. Trade setup only.
  5. MPC – 84.60 entry on break above the consolidations resistance. reverse head and shoulder pattern setup.
  6. HOV – Break from trading range or plateau above $6.20. Homebuilders are attempting to break higher as well.
  7. Follow up from Yesterday’s List:
  8. SNSS – Break from the trading range. Attempted on Tuesday. Looking for follow through. Worth small trade on the upside Wednesday. $5.75 entry, $5.45 stop, $6.50 target.
  9. PACB – Break above the top the trading range. $2.65 (gapped higher and never gave a good entry) still watching the trade.
  10. 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.
  11. CHK – Tested the breakout held and is ready to move higher? $23 target (close). Progressing nicely, raise your stop.
  12. 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.