Trading Notes for Today, September 10th

The Watch List and Play List have been updated for today. Review and execute according to your risk and investment objectives. If you have specific questions on any posts please forward them directly to Jim@JimsNotes.com.

Sectors to Watch:

  1. Financials continued to bounce with XLF moving above the $20 mark and continues to move towards the 50 DMA as the next resistance. The sector remains challenged by outside events and is still lagging the overall market. KBE & KRE are trading sideways at best and need to clear the $30.50 and $30.75 mark respectively to add to the upside. IAI is the strength of the sector for now as the brokers are adding solid moves higher.
  2. Volatility index falling on the positive move on Monday. SVXY trade in the S&P 500 model has work well on the recent move. Look for a test of the 14.7 level on the index and SVXY to eclipse the target on the move.
  3. Utilities broke short term support and has bounced back to resistance at $37.10. Need to clear this to add the sector to the S&P 500 Model. AES is leading on the upside relative to any reversal. OKE is showing a pennant pattern and a upside bias for the sector.
  4. Healthcare (XLV) has tested support at the $49 level and is making a move back to the upside. The move above $49.95 hit the entry point for the S&P 500 Model as a trade. Made a move above $50.20 to follow through the next entry point. Biotech (IBB) has bounced back nicely and moved above the previous high with another strong day on Monday. Watch and manage the elevated risk on the sector, stop at the entry point of $198.
  5. Technology has held up well during the last four weeks of selling or testing lower. We added a play in the S&P 500 Model, but XLK moved through the resistance of $31.80 hitting $32.20. The semiconductors (SOXX) cleared resistance at $63.50 and is a leader thus far. Tested $64.25 level on Friday, reversed higher on Monday. Scanning XLK shows some bounce moves off the recent lows that are of interest if the momentum follows through. Added ROM to the ONLY ETF Model.
  6. Consumer Discretionary bounced off the current level of support also with the uptrend line in play as well. Got the upside follow through in this sector as it cleared $58.75 level. Scanning the sector shows some solid moves higher in stocks like JCP (again), AN and KMX all put in solid upsides with breakout or reversal moves. The homebuilder (ITB) stocks were up 4% on Monday adding to Friday’s move. DHI, LEN and PHM booked solid moves on upside.
  7. The global markets bounced off the downside as the EAFE index (EFA) moved above the August high. Europe has been under pressure from oil prices moving higher, but Europe ETF (IEV) continues to move towards the August high. China (GXC) made a big move higher and is setting the pace on the upside the last two weeks. The emerging markets (EEM) have bounced off the lows and cleared the key resistance at $40 on Monday. All is good on the bounce as the global markets follow the US lead.
  8. Treasury yields were unchanged today at 3.84% on the 30 year bond, and 2.89% on the ten year bond. The worry about the Fed, improving economic data and the overseas growth pushing inflation (like China) had pushed rates higher, but looking for sideways movement short term.
  9. Crude oil fell some on Monday, but the jump on the Putin comments over Syria had pushed oil to $110 per barrel level. The upside remains in play, but watch for the selling to kick in if we don’t launch an attack on Syria. Downside risk is still elevated short term and stops should be tight if you are trading the move. DTO is short play ETF.
  10. Commodities were lower as DBC is testing support again at the $26.50 mark. Watch to see if we hold here or break lower. The dollar moved back towards the $22 support level on UUP. Watch and let the emotions calm. Gold and silver both volatile and lack direction other than trading the news. Watch the downside in the metal if the rally takes root. Natural gas bounced back from the selling on Thursday and Friday to close higher on Monday. Sector overall continues to be challenged by the outlook short term. Not a fan of the overall sector short term.
  11. The move on Monday is a positive move in a news driven market. The interesting part of the move, it was a lack of news that pushed the indexes higher. The consensus is growing that nothing happens in Syria relative to the US intervention. Futures are up again today and we are in a position to add on the upside… assume no negative outside news events.

The models remain under invested for the simple reason of uncertainty going forward. We added positions on Wednesday as the bounce pushed some sectors through resistance on the bounce off support. Thus, we remain patient and let this all unfold moving forward.

  1. The S&P 500 Model. Adjust your stops and keep moving forward as upside confirms.
  2. The Sector Rotation Model. Added IYR to watch list. Adjusted stops and looking forward.
  3. The ONLY ETF Model. Added to watch list. Adjusted stops and managing the risk.
  4. The ONE EGG Model. QQQ is the trade set up to start the week. Got gap open and then up from there. Didn’t take the trade on the move. Watching to see how it plays at the next level.

Pattern Setups For Today:

  1. IYR – $64 breakout from double bottom. Take the entry on the confirmation of the move higher. Rates are slowing and repair from the damage should move to $66.50 as a start.
  2. DTO – Reversal in oil prices if war off and market rally to play out. $30.50 follow through entry on bounce.
  3. BTU – Break double bottom in uptrend reversal. move above 50 DMA entry. Target $20.50.
  4. Follow up on previous trades or posts:
  5. IWM – base breakout and trendline. $102.50 entry. Stop $100. Manage the stop.
  6. YY – cup. $44 entry. Breakout and follow through on the upside. Stop $43.90
  7. KOG – ascending triangle breakout – cleared $10.30 for the entry and looking for a test of the move higher. Entry $10.30 (max $10.40). Stop $10.40.
  8. AMZN – reversal. move back above $294 on volume is entry. Oct $295 call. Entry $16. Stop $289.80 (stock) Follow through on Monday upside.
  9. XLNX – Trend continuation. The test of the 50 DMA and uptrend. Bounced to resistance at $44.65. Look for continuation of the upside move with $47 target. Added $44.75. Stop $45. Held gains and adjusted stop.
  10. VECO – Base breakout –  $35.35 entry. target $38.10. Added on the upside follow through. Stop $34.20. Testing
  11. AAPL – The buyers are in play. bounce off the $485 level is of interest short term. Added the $495 Oct Call ($19.80 – 8/28) on reversal and move higher. Moved above $493 entry point. Tested the support and looking for the bounce. Stop $16.50 on call option. Nice move higher.
  12. CLDX – Breakout Test – $21.70 support tested on Wednesday and looking for a bounce back to the $24 high. $22 entry. Added and manage stop at $23. Nice move higher.
  13. SBUX – Test of support $70. Tested and bounced. Move above $71.30 for the entry. Added trade $71.30. Stop $69.50. Add to the position on confirmation of move above $72.50. 
  14. AFOP – Breakout Test – solid move higher from the trading range at $34.50. If holds support and resumes upside advance, look for trade up to the previous high near $40. added $35. stop $35.
  15. DDD – Test of breakout from trading range. $40.40 is level to hold and then look for entry. $50 max entry on the trade. Target is $54. added at $49.70. stop $50.90.
  16. FST – Cup & handle breakout. Entry is $5.60. Natural gas stock, sector reversing on rise in commodity price. Hit entry and moving higher. Stop $5.55.

Facebook (FB) Update:

  • Facebook – The sentiment towards the stock has shifted as it found support at the $22.80 level and moved to the top of the trading range before breaking higher and adding positions. The move above $24.50 was entry for position.
  • Added position at $24.75 (1000 shares). Stop is $22.75 for now. A move back above the 200 day moving average and we will add to the position. (Added 1000 shares at $25.65 on break) Sentiment towards the stock short term is gaining. Consolidating at the current levels and holding. Still like the upside near term as it is gaining positive comments from analyst.
  • Earning beat expectations on Wednesday and the stock jumped 29%. Here is where greed versus objective comes into play. This is a long term play and if the gains hold up today in trading the upside gain on the position is tempting. We will now have to design a way of protecting or realizing part of the gain short term. Be patient with the position on the upside as you are on the downside. Interesting link on earnings for facebook
  • 8/13 – The stock broke lower from the pennant. Watch and manage your risk. As stated yesterday we are going to establish a hedge to protect the downside risk. Add a December $37 Put on FB @ $3.35.
  • 9/2 – Nice bounce to $41.34 and new high. Tuesday reversed the move higher as markets react to speculation. Watching for any trading opportunities off the pullback test and then a move higher. Test of $39.30 level is the key to hold. If reverses back to the upside looking to buy 1000 shares as trade back to $42. 8/28 – Added 1000 shares at $39.95 for trade. Stop on that trade is $39.95 or break even now. If we hit the target at $42 sell half of the 1000 shares. Sold 1/2 on 8/30 for nice gain. Watch and manage the balance at breakeven on the stop.
  • 9/9 – Broke higher to continue the move on Friday. Raise stop to $42 (target) on the 500 shares purchased for a trade. The upside still in play.

NOTE: The pattern trades above are setups that I see for a potential swing trade or trade opportunities. Some will fail to follow through on the pattern, some will break and trade according to the pattern. The key is to use discipline in the trades. Entry, Exit and Target on all trades is vital. I am posting these as opportunities that I see when doing scans daily. You can use them as a teaching tool or you can trade them, either way please use discipline. All investing comes with risk. Our job as investors is to manage the risk. Keep your focus and discipline in place.