Trading Notes for Today, September 12th

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 bounce with XLF holding the move above the $20 mark and the 50 DMA. The sector remains challenged by outside events, but has move higher the last two weeks. KBE & KRE are trading sideways at best and still need some kind of catalyst on the upside if the trend shifts. IAI remains the strength of the sector for now as the brokers added a solid moves higher as stocks like MS lead the way. Looking to add the banks (KBE) to our positions with a move higher through resistance. KIE is leading in the sector and some of the top producing stocks are in the sub-sector. PGR, ACE, and AFL have pushed higher.
  2. Volatility index falling on the positive move higher in the index. SVXY trade in the S&P 500 model has work well on the recent move. We got the test of the 13.8 level on the index and SVXY to hit the target on the move. Manage the risk of the trade and raise your stop.
  3. Healthcare (XLV) 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 with the $51.50 mark in sight as the previous high. Biotech (IBB) has moved above the previous high and accelerating. Watch and manage the elevated risk on the sector, stop at $201.50.
  4. Technology bounced and made a move  back towards the previous high. We added a play in the S&P 500 Model. Apple pulled the index down Wednesday with a 5% hit following the new iPhone release. Obviously not well received. The semiconductors (SOXX) cleared resistance at $63.50 and moved to the previous high at $66.85. Internet (FDN) is leading on the upside as well in the sector. IGN and IGV both made solid moves on the upside. Sector still in a leadership role.
  5. Consumer Discretionary sector bounced and then cleared $58.75 level resistance level and move back towards the $60.75 mark. Scanning the sector shows some solid moves higher in retail stocks show with XRT cleared the 50 DMA and $80.75 resistance. Home builders made another move higher with LEN, DHI and TOL adding to the move in the broad sector. Watch and manage the risk of the sector short term.
  6. The global markets bounced led by the EAFE index (EFA) moving above the August high and pushing back towards the May high. Europe (IEV) cleared the August and May highs and added to the gains on Wednesday. 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 and resting on the 200 DMA currenlty. All is good on the bounce as the global markets follow the US lead.
  7. Treasury yields were lower Wednesday at 3.86% on the 30 year bond, and 2.92% on the ten year bond. Back to challenging the resistance at the old highs. The worry about the FOMC meeting next week, improving economic data and the overseas growth pushing inflation (like China) has pushed rates higher, but looking for some sideways movement short term.
  8. Crude oil fell Tuesday, the outlook for some resolution with Syria is keeping the price in check. However, if the news from China is real on the economic improvements, look for the upside to hold as speculation is now looking demand to rise as a result. No validation in demand yet, but we are going to push the prices higher on speculation. Makes perfect sense… right? ¬†Downside risk is still to be watched as speculation has a funny way of dissipating and stops should be tight if you are trading the move off the bounce. DTO is short play ETF.
  9. Commodities have continued to be a mixed bag of tricks. Gold lower after hitting our target on the trade. Silver has led the way lower. Oil is mixed based on which research your read. Base metals have given back their gains and agriculture (DBA) is the only bright spot short term. MOO made a solid bounce off the previous low as a result. Watching the price of soybeans and other drought deprived commodities. Patience in adding any positions.
  10. The futures are trading flat as the market has been on the positive side the majority of the last two weeks. No indications of slowing today and we will manage with the upside bias in play.

The models are putting money to work, and for the near term, the bias is to move higher. We added 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. BK – Triangle – $31.20 entry on break above the resistance.
  2. DBA – reverse head and shoulder – $25.50 entry on break higher.
  3. DHI – Bottom consolidation – closed above $19.40 and looking to confirm the breakout entry at 19.70.
  4. Homebuilders are breaking from a consolidation based (ITB). KBH, PHM, DHI are setting the pace on the upside. Watch for the follow through on the upside to the technical breakout.
  5. C – bottom reversal. testing the break above $50.25. Looking for entry and move higher in the large banks.
  6. Follow up on previous trades or posts:
  7. BIIB – cup & handle. Move through $230 entry. Biotech is leading the way. Nice follow through higher.
  8. NTES – pennant. Move above $73.50 entry. Internet one of leaders as well. Nice move higher.
  9. BDSI – breakout test. Move above $5.30 entry. Biotech sector. Hit entry.
  10. 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. Reversed — watch for follow through on upside.
  11. 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.
  12. 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.
  13. BTU – Break double bottom in uptrend reversal. move above 50 DMA entry @ 18.70. Target $20.50. Added on early move higher. Stop 18.10.
  14. IWM – base breakout and trendline. $102.50 entry. Stop $104. Manage the stop in follow up to solid move higher.
  15. YY – cup. $44 entry. Breakout and follow through on the upside. Stop $46.50. HIT STOP!
  16. 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.
  17. AMZN – reversal. move back above $294 on volume is entry. Oct $295 call. Entry $16. Stop $289.80 (stock) Follow through on upside. Tested on Wednesday.
  18. 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 $46. Held gains and adjusted stop.
  19. VECO РBase breakout Р $35.35 entry. target $38.10. Added on the upside follow through. Stop $34.20. Testing
  20. 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. HIT STOP
  21. SBUX РTest of support $70. Tested and bounced. Move above $71.30 for the entry. Added trade $71.30. Stop $74. Add to the position on confirmation of move above $72.50. Nice follow through on Wednesday.
  22. 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 $39.
  23. 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.

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.
  • 9/11 – Broke higher to continue the move, but it was a result of rumors relative to China allowing Facebook to operate within the country. They currently do not, and this would be a big opportunity. Based on the research behind this rumor there is no substantial evidence to any of the reports. Thus, I would expect the run to soften as the reality takes place on no deal in China. ¬†Hold stop to $42.50 (target) on the 500 shares purchased for a trade.

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.