Trading Notes for Today, September 11th

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 the 50 DMA. The sector remains challenged by outside events, but showed a solid move higher on Tuesday. KBE & KRE are trading sideways at best and did 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 added a solid moves higher.
  2. Volatility index falling on the positive move again on Tuesday. SVXY trade in the S&P 500 model has work well on the recent move. We got the test of the 14.7 level on the index and SVXY to hit the target on the move. Manage the risk of the trade.
  3. Utilities broke short term support at $37.10, but has reversed and hit the entry point on Tuesday for the upside trade. and added to the S&P 500 Model. AES is leading on the upside relative to the reversal. OKE is showing a pennant pattern and pushed to the for the sector. Worth the trade short term.
  4. Healthcare (XLV) has tested support at the $49 level, but reversed and moved above $49.95 mark hitting the entry point for the S&P 500 Model as a trade. Made a move above $50.20 to follow through and Biotech (IBB) has moved above the previous high and accelerating on Tuesday. Watch and manage the elevated risk on the sector, stop at $201.50.
  5. Technology bounced and made a move  back towards the previous high. We added a play in the S&P 500 Model. The semiconductors (SOXX) cleared resistance at $63.50 and moved to the previous high at $66.85 on Tuesday. Added ROM to the ONLY ETF Model. Internet (FDN) is leading on the upside as well in the sector. IGN and IGV both made solid moves on Tuesday as well on the upside.
  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, NFLX and KMX all put in solid upside. XRT cleared the 50 DMA on Tuesday. Watch and manage the risk of the sector short term.
  7. The global markets bounced off the downside as the EAFE index (EFA) moved above the August high. Europe moved higher as IEV cleared the August and May highs. 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 and followed through on Tuesday. All is good on the bounce as the global markets follow the US lead.
  8. Treasury yields were higher today at 3.89% on the 30 year bond, and 2.95% on the ten year bond. Back to challenging the resistance at the old highs. 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 moved below support again at the $26.50 mark. Watch to see if we hold here or break lower. DBA is the only positive in the commodity sector for now. MOO made a solid bounce off the previous low as a result. Watching the price of soybeans and other drought deprived commodities. The dollar moved back towards the $22 support level on UUP. Watch and let the emotions calm. Gold and silver both volatile and moved lower on the day. The lack of follow through in either direction is a challenge short term. Natural gas continues to lack direction and is consolidating near the current levels. Not a fan of the overall sector short term.
  11. The move on Tuesday is a positive move in a news driven market.

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. 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. Scanning looking at a play in the financials with KBE see Watch List.

Pattern Setups For Today:

  1. BIIB – cup & handle. Move through $230 entry. Biotech is leading the way.
  2. NTES – pennant. Move above $73.50 entry. Internet one of leaders as well.
  3. BDSI – breakout test. Move above $5.30 entry. Biotech sector.
  4. STX – downtrend channel. Moved above $40.50 looking for test and entry near that point or move through the $41.40 level. Tech sector which is the other leader.
  5. Follow up on previous trades or posts:
  6. IYR Р$64 breakout from double bottom. Took the entry on the move higher. Rates are slowing and repair from the damage should move to $66.50 as a start. Manage the stop at $63.
  7. DTO – Reversal in oil prices if war off and market rally to play out. $30.50 follow through entry on bounce. Gap higher and watching for how to play this going forward.
  8. BTU – Break double bottom in uptrend reversal. move above 50 DMA entry. Target $20.50. Added on early move higher.
  9. IWM – base breakout and trendline. $102.50 entry. Stop $104. Manage the stop in follow up to solid move higher.
  10. YY – cup. $44 entry. Breakout and follow through on the upside. Stop $46.50.
  11. 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.
  12. AMZN – reversal. move back above $294 on volume is entry. Oct $295 call. Entry $16. Stop $289.80 (stock) Follow through on Tuesday upside.
  13. 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 $45.75. Held gains and adjusted stop.
  14. VECO РBase breakout Р $35.35 entry. target $38.10. Added on the upside follow through. Stop $34.20. Testing
  15. 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 $18.50 on call option. HIT Stop on Tuesday
  16. CLDX – Breakout Test – $21.70 support tested and looking for a bounce back to the $24 high. $22 entry. Added and manage stop at $23.50. Nice move higher.
  17. SBUX РTest of support $70. Tested and bounced. Move above $71.30 for the entry. Added trade $71.30. Stop $72.30. Add to the position on confirmation of move above $72.50. Nice follow through on Tuesday.
  18. 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 (hit target on Wednesday). added $35. stop $38.50.
  19. DDD РTest of breakout from trading range. Patience and look for entry above $49.50.  Target is $54. added at $49.70. stop $50.90.
  20. 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. Hit stop on move intraday.

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.
  • 9/9 – Broke higher to continue the move on Friday. Raise stop to $42.50 (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.