Trading Notes for Today, September 23rd

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 market is at a decision point following options expiration some topping last week. There are plenty of opinions on how this is going to play out going forward, but we will take the same approach… cautious. The new fight is now focused on the debt ceiling in Congress and we will have to listen to all the new trash being dumped from Washington. The impact on the markets will build the closer we get to the deadline. Below are the sectors of interest as we start the trading week.
  2. Treasury bonds continue the bounce off the recent lows. The upside is limited from my view, but the flattening of the yield curve is a positive for the broad indexes. $106 resistance on TLT and $104 support for now. Looking to stay in this range for now and watching the interest sensitive sectors in conjunction.
  3. Small Cap (IWM) shows some topping and support is $106.
  4. Mid Cap (IJH) fell to support at $124.55 and weaker than the small cap stocks. Watch for signs of downside leadership.
  5. Healthcare (XLV) moved above the July high, but testing. Some downside pressure from the healthcare providers (IHF) and the saber rattling in Congress over Obamacare. Biotech (IBB) remains the leadership and moving higher.
  6. Technology made move above $32.40 and is now testing that level from the selling on Friday. Move lower is negative for the sector. The semiconductors (SOXX) tested the high at $68 on a vertical move and could test from the aggressive gains. $66.70 level to watch today. Internet (FDN) and Software (IGV) remain near highs and networking (IGN) tested back to the 10 DMA and $31.04 is level to hold for now.
  7. Financials (XLF) looking to hold $20.30 as sold lower. Banks (KBE) remain the challenge and earnings may not favor the sector short term. Mortgage business has been weak with the higher interest rates. Watching the downside risk.
  8. Utilities (XLU) reversal as interest rates move and emotions rise. Still watching the longer term upside opportunity.
  9. Energy (XLE) reversal to support at $83.85, previous high, is level to watch. Crude oil (OIL) reversed to $104.75 and still looking for more downside without a rise in demand as speculation dries up. Oil services (OIH) tested back to the 10 DMA. Sector could come under pressure is oil continues lower this week.
  10. Gold (GLD) too much speculation and uncertianty for my taste. $125.50 level to watch for now.
  11. Today futures are pointing higher, but watch to see if there is any sentiment shift. The VIX tested lower on Friday and bounced with the mild selling efforts. A move below 13 would be a positive sign for the buyers.

The models are stalled looking for new plays as the spike on Wednesday elevated the risk, followed by uncertainty the balance of the week. I am speculating this 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 unfold. This is the final week of the month and quarter. Earnings are around the corner with plenty of economic data to add to the mix. The bias remains with the buyers for now.

Pattern Setups For Today:

  1. FSLR – reverse H&S setup at 40.55 entry. Tested lower on Friday, but still set up to break higher.
  2. TRIP – Consolidation on gap higher. Entry $75.50. In leading sector.
  3. XNPT – Pennant. Entry $5.80. In leading sector.
  4. DIA – reversal and support break. This has set up a downside play worth watching today. $153.80 short entry ( or DXD $32.60 inverse ETF)
  5. Follow up on previous trades or posts:
  6. IYZ – Breakout test. Entry $27.80. Looking for move back to the previous high. Stop $27.50
  7. 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
  8. 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. entry at $35. Stop$35.50
  9. YY – Breakout test. Tested the $44 breakout level. Watch the upside momentum to continue. $46.70 entry hit. Stop $47.50
  10. 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 $19. Nice acceleration higher. Sold off Friday hit stop.
  11. BK – Triangle – $31.20 entry on break above the resistance. Added 1/2 position watching to see if we follow through. Stop @$30.70. Willing to sell the position in today’s trading as banks continue to struggle. Sold on early reversal Friday.
  12. C – bottom reversal. testing the break above $50.25. Looking for entry and move higher in the large banks. Entry $50.40 and Stop $50.90. Got the move above $51.25 resistance but reversed on Friday? Honor the stop. Banks showing weakness.
  13. BIIB – cup & handle. Move through $230 entry. Biotech is leading the way. Nice follow through higher. Stop $242 on move higher. Hit target at $243 – looking to take half off if stalls.
  14. NTES – pennant. Move above $73.50 entry. Internet one of leaders as well. Nice move higher. Stop $73. still looking for the stock to break above the $77 level on upside.
  15. IYR – $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. The FED influence creating volatility. Honor the stop.
  16. IWM – base breakout and trendline. $102.50 entry. Stop $106. Manage the stop in follow up to solid move higher. Watch how it plays out going forward.
  17. 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. Hit target look for exit if reverses.
  18. 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 $310. Watch as hit new high on Friday.
  19. 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.
  20. SBUX – Test of support $70. Move above $71.30 for the entry. Added trade $71.30. Stop $75 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…
  • 9/20 – 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. Got big follow through on Friday with options expiration and the index rebalance.  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.