Trading Notes for Today, September 20th

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. The markets spent the Thursday digesting or deciding what the reality of the FOMC no decision on cutting stimulus meant? We are all in the same boat on that one especially after listening to the explanation of the timing. We will just leave it at the fact that the economy is still weak and the outlook isn’t exactly impressive.
  2. Volatility index moved lower to close at 13.2 on Thursday as the volatility completely subsided. SVXY trade in the S&P 500 model has worked well on the recent move and we have raised the stop on the position and we need to manage the gains again today.
  3. Consumer Staples (XLP) hitting against resistance at the previous high near $41.80 and looking for some upside help.
  4. Healthcare (XLV) moved above the July high and remains one of the leaders on the current move off the lows. Biotech (IBB) has been the primary leadership. Pharma (XPH) and medical devices (IHI) added to break above the July highs and push the broader index higher. IHF, healthcare providers hit stops as it accelerated lower on Thursday. Holding the broad sector as we mange the risk.
  5. Technology is still attempting to take on a leadership role with a break above the $32.40 mark on the ETF. The semiconductors (SOXX) tested the high at $66.80 and higher on Wednesday, but tested back near $67.25 on Thursday. The index is looking soft and taking some profit here may be prudent. Taking half off and managing the balance looks like the move short term. Internet (FDN), Networking (IGN) and Software (IGV) are all made solid contributions on the upside Thursday.
  6. Utilities a challenge when it comes to rising interest rates. Small bump in rates on Thursday as the economic data was better than expected. The bottom line is speculation is running the ups and downs of the yields currently. The key is to manage the position with patience and let the volatility work itself out in time. As I stated earlier this week it won’t be quick to reverse to an uptrend, but this sector offers attractive dividends and upside for the patient investor.
  7. The global markets bounced led by the EAFE index (EFA) moving above the May high and is looking to keep the moving with the US markets. The easing from the US has been hanging over the global markets, but they got what they were looking for on Wednesday… and accommodating Fed. Europe (IEV) cleared the August and May highs. The emerging markets (EEM) have bounced off the lows and cleared the key resistance at $40 as the easing was a big boost to the sector. Look for continuation of the upside short term globally.
  8. Treasury yields were up on economic data Thursday to 3.8% on the 30 year bond, and 2.74% on the ten year bond. The rally Wednesday provided a needed bounce in the bond.  Some give back on Thursday says expect volatility in the sector short term.
  9. Crude remains a challenge as speculation drives prices up and down. Looking for the short term to be more of the same, but we started the week looking for some confirmation of a move lower. Than has not transpired and the outlook is still speculative. We will wait until the picture gains clarity.
  10. Today

The models are stalled looking for new plays as the spike on Wednesday elevated the risk. Speculating it is setting up for a test on the downside from the move higher. We added as the bounce pushed some sectors through resistance and we continue to scan for opportunities, but the risk/reward is out of balance. Thus, we remain patient and let this all unfold moving forward. The week has followed through on the bounce off the lows started last week.

  1. The S&P 500 Model. Adjust your stops and let it run for now. Watch and hang on for the ride.
  2. The Sector Rotation Model. Watching as the leaders move higher, and where the best opportunities lie looking forward. Adjust your stops accordingly.
  3. The ONLY ETF Model. Adjusted stops and managing the risk now. Watch how today sets up relative to the Fed.
  4. The ONE EGG Model. Scanning looking at a play in the financials with KBE see Watch List.

Pattern Setups For Today:

  1. CLF – triangle or handle on the cup. Break above the $23.50 resistance is entry. Patient as the volatility has picked up in the mining sector.
  2. Follow up on previous trades or posts:
  3. NIHD – descending triangle – telecom space attempting to break higher. Entry $7.10. Patiently watching fof the entry.
  4. MTL – Pennant – Entry $3.70. The sector is moving in positive trend and the stock is poised to assist on the upside from the short term consolidation. Nice push higher for stock on Fed news. Stop $3.55
  5. IYZ – Breakout test. Entry $27.80. Looking for move back to the previous high. Stop $27.50
  6. SSNC – Pennant – clear the high at $38.20 for entry. Software is one of the leaders in tech. Nice upside move continues. Stop 38.50
  7. YNDX – Test of Breakout. Moved higher and tested now need a continuation on upside. Internet is one of leaders in tech. Nice push and follow through on the day with entry at $35. Stop$35.
  8. YY – Breakout test. Tested the $44 breakout level. Watch the upside momentum to continue. $46.70 entry hit. Stop $46.50.
  9. BZH – Breakout test. Tested the $17.85 level and looking for a move higher. $18.40 entry. Tested at open and then moved higher. Stop $18.75. Nice acceleration higher.
  10. BK – Triangle – $31.20 entry on break above the resistance. Added 1/2 position watching to see if we follow through. Stop @$30.70. Managed the gap lower open and let it play out, but willing to sell the position in today’s trading as banks continue to struggle.
  11. C – bottom reversal. testing the break above $50.25. Looking for entry and move higher in the large banks. Entry $50.40 and Stop $49.50. Looking for a move above $51.25 resistance and got it on Wednesday.
  12. BIIB – cup & handle. Move through $230 entry. Biotech is leading the way. Nice follow through higher. Stop $235 on move higher.
  13. NTES – pennant. Move above $73.50 entry. Internet one of leaders as well. Nice move higher. Stop $72.80. still looking for the stock to break above te $77 level on upside.
  14. IYR Р$64 breakout from double bottom. Took the entry (64.20) on the move higher. Rates are slowing and repair from the damage should move to $66.50 as a start. Raise stop $65. Watch
  15. IWM – base breakout and trendline. $102.50 entry. Stop $104.80. Manage the stop in follow up to solid move higher. Watch how it plays out going forward.
  16. KOG – ascending triangle breakout – cleared $10.30 for the entry and made move higher. Entry $10.40. Stop $10.90. Break above $11.30 would be positive short term. Watch to hold the move and manage the exit.
  17. AMZN – reversal. move back above $294 on volume is entry. Oct $295 call. Sold half of the position at the open on Monday at $300. Solid move to $304 Tuesday, followed by nice gain on Wednesday to the target of the July high. Raise stop to $305. Flat day Thursday.
  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 (HIT TARGET). Added $44.75. Stop $46.50. Nice uptrend move manage the stop. Take half off and manage balance at the stop.
  19. SBUX РTest of support $70. Move above $71.30 for the entry. Added trade $71.30. Stop $74 both positions. Add to the position on confirmation of move above $72.50. Move above $76.50 is a continuation of trend.

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 ($42) on 8/30 for nice gain. Sold balance at $43 – 9/16.
  • 9/16 – 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. ¬†Sold position on the selling on Monday in opposition to the market. Booked the profit and now watching to see how this news unfolds going forward. I never like a 4% decline in a stock…
  • 9/19 – love the way things work out sometimes. 6% bounce and back to the top and resistance and followed through to new high. Got the last of the sellers out of the way? Watching to see how it acts here. The addition to the NASDAQ 100 index added the initial upside move. It could still reverse. We will hold our long term position and look for the opportunity short term. Patience

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.