Trading Notes for Today – May 8th

Market is showing some signs of upside fatigue, but also seeing rotation into other sectors continue. The sellers are still hibernating, but that doesn’t mean we can rest easy. Risk management is a daily event for portfolio management.

Apple took a break and saw some profit taking early in the trading day with a  $12 intraday swing. Ended the day down $2, but was testing the move higher. Target remains $475 near term.

Bank of America also tested a move higher with a big intraday swing. If you can stomach volatility this is still an undervalued large bank stock. Banks did well overall on the day.

Netflix (NFLX) tested lower on Monday and followed through on Tuesday. Still looking to the downside test of $196, Watch the upside following a test, this stock is not done moving just testing the gap higher.

Sector Moves of Note:

  1. S&P 500 index the move to 1625 with an across the broad move in the sectors. No need to test any moves higher as investors are blind with belief that all is good and there is no stopping this momentum. Over extended and a test is in order. But, there isn’t much interest in the downside currently.
  2. Gold posted lower on Tuesday and is in position to test the $137 mark or lower. Added GLL to the  ONLY ETF Watch List for today.
  3. Oil is hold at $22.10-22.40 for now. A move below that level would offer a short play in the speculative direction swings for crude. Added DTO to the ONLY ETF Watch List.
  4. Semiconductors still leading technology. SOXX move above $60.26 is still moving higher. A test of the move would be of interest in the $60.50-61 range. A short term (3-9 months) target would be $70 for the sector.
  5. KBR was added as the EGG for today. The breakout move on Tuesday was a big positive not only for regional banks, but a key for the continuation of the upside move in financials overall.
  6. JPM is in position to break from the consolidation above $49.60 and continue higher. Stepping back and looking at the weekly chart you can see all the highs in this range as long term resistance. I will take some conviction for the stock to move above this range, but I like the upside momentum of the sector to help.
  7. Bonds continue to struggle as yields are rising and prices are dropping. Watch for a test at the 3.1% yield level on the 30 year bond. That would equate to a bounce in TLT and a drop in TBF. Adjust your stop accordingly.
  8. Pattern Setups: 1) GRMN – Cup & handle pattern break above $35.75 looks interesting.  2) BIDU – bottoming consolidation range. Break above downtrend line and some resistance at $90.  3) SNSS – descending triangle break above $5.70 looks interesting.  4) NTAP – down trending channel with break above $35.75.  5) TMUS – flag on gap higher. Move above $18.  5) CLF – cup or saucer break above $22.

Market worked on digesting the move from Friday. Still not a big believer in the upside, but willing to take what the market gives as we have added some trading positions to the models. Watch, manage and protect your money as this unfolds.