Trading Notes for Wednesday, June 12th

Below is our outline of what we are watching today and some pattern ideas. The Watch List and Play List have been updated as well. Review and exercise caution. If you have specific questions on any posts please forward them directly to me.

Sectors to Watch:

  1. The S&P 500 index remains at resistance near 1648.  3470 the number of the NASDAQ and 15,300 for the Dow. Tuesday brought back the stimulus concerns with a global twist from Japan. Upside move seems a distant wish now, but remember there is no clearly defined leadership at this point. Trading range may be the short term solution for the broad markets.
  2. Treasury bond yields are the other primary concern for investors. The move to 3.33% for the 30 year and 2.19% on the 10 year, both down on Tuesday, but not much, the bond prices were more volatile than the yield move warranted. Downside still in play, took some downside on the TBF and TBT added to the models on Monday. Down is still the direction for bonds and we will have to manage these positions.
  3. Japan (EWJ) had to deal with the disappointment of the Bank of Japan not putting more money it to stabilize bonds. The yen fell and blah, blah, blah. I still like the longer term view of Japan and willing to build a position at this level and add to going forward. This will be a volatile ride as the media is on the story and creating anxiety. Watch the outcome and let it develop. EWJ on the ONLY ETF Watch List.
  4. The downside risk is still in play. The bounce off support was just that, a bounce. The sellers and the buyers are willing to beat each other up which may result in a trading range short term. We have to be patient and deal with the short term volatility as we go forward. If we take the downside plays it will have to be with a 3-6 month time horizon as this is setting up to take time to play out on the downside.
  5. PSQ – short NASDAQ 100 index is set up to play at $22.60.
  6. SH – short S&P 500 index is set up to play at $29.35.
  7. Manage your short plays in FXP and EEV.
  8. Facebook – No positions currently. The sentiment towards the stock remains negative, but an attitude adjustment from the upgrade to a buy on Monday. Found some support at the $22.80 level and bounced back above the $24 level and holding for now. Thus, the reversal we discussed is now in play short term. If you took on the risk of the 23 September puts, the party isn’t over yet. Plenty of resistance in the $24.75-25 range. (Facebook Page Updated)

Pattern Setups For Today:

  1. VXX – cup & handle break above $20.25 trade on upside.
  2. MM – cup & handle break above $8.55 upside in play.
  3. Follow up on previous posts:
  4. ITC – descending wedge, play entry at $89.20. Small Cap Utility stock. Still worth watching for now. If pulls back to the bottom of the range the bounce off the low would be the play.
  5. BONT – Pennant – break above $22 entry.
  6. ANAD – Trading range with break above the $2.11 entry point. Manage your trade on the test.
  7. KOLD – Cleared $18.35 ($73.40 reverse split 1 for 4), cleared the next level at $19.45 ($77.80) and is still running. Stops at $78 and watch.
  8. PCLN – Pennant upside break at $810. Nice bounce and follow through on the upside, but testing.
  9. LEDS – triangle/wedge breakout to the upside at $1.70. Nice 11% gain on the upside break Monday. Still upside, manage the stop.
  10. PACB – Break above the top the trading range. $2.65 – still climbing slowly.
  11. CRAY – Cup breakout at $18.05, initial target $18.85 and then 20.20. Still moving in a positive direction.
  • 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. Markets remain choppy and directionally challenged for now. Keep your focus and discipline in place.