Author Archive

The broad markets rally on a bad jobs report that could have been worse. Interesting rational behind the jobs report today. The weakness is still prevalent, but it could have been worse was the theme. This is a good example of taking what the market gives and adjusting your stops. The data has been better, however the economic slowing from first quarter continues. That is the overriding concern for many investors. Some improvement is giving hope for now.

The short on Treasury bonds played out today, but the gap higher on TBT was too much to take the play. We will look for a pullback opportunity and go from there.

We did take the play on XLF. I placed a buy-stop-limit order at the open and the trade executed on the pullback from the higher open. I expect to manage this aggressively as the financial sector is not showing the greatest outlook fundamentally. This is an oversold bounce in the sector and and a trade opportunity.

Oil dropped from the open as the supply/demand picture is still not the best I have seen. Watch for the opportunity on a move higher.

This list will get updated on Monday. I am looking at both side of the market still. I removed the posted short plays, but I think there could be some downside plays short term if resistance holds. Look for the update for next week.

Market moves higher again as investors like the jobs report. Economic data has been the motivator this week and we will take what the market gives one day at a time. Our play lists remains a benefactor of the move and we will not complain about that.

We added XLF today as the financial stocks continued to bounce off the lows. This is a trade opportunity on the bounce off support in an oversold sector. Be disciplined with the play and keep your stops in place.

Raised the stop on MOO and SSO as they move higher. We continue to push the stops higher to protect the principle in play as market volatility is alive and well.

Still being patient as the data is not overly convincing for a longer term rally. Trades are the call for now.

Give the economic data credit for the move higher this week. The expectations were not high coming into the week and that helped the slightly better news look good to investors. The S&P 500 index held support at the 1040 mark and moved up nicely on Wednesday with the global markets getting the credit. China had a stronger than expected manufacturing report followed by the US ISM manufacturing report showing positive data as well. This pushed the indexes up nearly 3% with solid follow through on Thursday and Friday.

The million dollar question would be can we hold the bounce as the index hits resistance at 1100. Do we push through towards the 1130 level or test the bounce? Next week promises to be interesting from trading perspective and with limited economic data on tap it will be left to fend for itself. Our current montra is one day at a time and that is how we need to approach next week.

The commodities found support as well in the energy sector as crude bounced back from selling back near the $70 level. Crude is still struggling and we will watch to see how it plays out. The metals have rallied back to the high or resistance at $21 on DBB. Copper broke higher through $45.60 and steel has picked up again. Gold is holding near the previous high, but the resistance is keeping it from moving up. It could offer a short play next week on a pullback. Agriculture commodities used the jobs report on Friday to break through resistance and continue the bounce higher.

Bonds were in an overbought situation technically and some air came out of the balloon with yields moving higher and bond prices heading lower. This was a short term sell signal or short on Treasury bonds. I dont’ think the sell off will last as the fear factor relative to the economy is still in play. Take the trades relative to the short term, but longer term bonds are still in play for now from a dividend perspective.

Watch for the bounce off support to follow through with resistance now in play. Unless there is more good news on the horizon the trading range should remain in play for now. The upside will need signs of economic growth as well as growth in the revenue and earnings. Be patient and let the data build before putting too much capital at risk. This is still a traders market.

I have updated the tables below and the video update (Sector Watch) has been posted. Be patient, plan your trades and trade your plans.

The drift higher today was the perfect follow through to the gains yesterday. The beginning of a new month brings new money, but the stable economic data gets the nod for the momentum picking up relative to the broad markets. We have depleted the watch list with the exception of the short plays. They will be removed tomorrow if the response to the jobs report holds the market up.

Added the short play on Treasury bonds relative to the yields rising on the momentum in equities. I am looking at this as a trade only and the short term gain potential. Measure the risk of the trade prior to jumping in.

Added a trade on financials as the momentum picks up short term. Let the trade build and don’t force the entry.

Added trade on crude based on the speculation in demand rising relative to the global growth picture near term.

Be patient and let the market validate the move higher. If we pullback we make adjustments to the entry points.

Play list remains in place as we stopped out of the short on semiconductors (SSG). In hindsight should have sold the entire position on this play based on the market volatility the last couple of weeks. I say this not to pity the trade, but to learn from the experience of the trade. These are types of events to keep track of in your trading journal to improve your future trading.

Adjusted stops on IYZ, MOO and XLI. Still giving room for the daily volatility. Tomorrow the jobs report will have an impact if the number is worst than expected. That said, I don’t know if expectations could be any worse. Watch the open and manage your stops accordingly.

Manage the risk of the plays daily as the market remains volatile. Don’t be fooled by the bounce off support. Until the data validates it is more than that we play it accordingly.

The play list benefited from the move higher in the broad markets today. We have adjusted the stops on the plays to protect the downside risk. The question mark is will the market continue to move on today’s momentum or will it retreat again as it has over the last couple of weeks. We want to be patient, but then the market hasn’t been easy to manage relative to the intraday and day-to-day volatility.

We added EWH which has been on the watch list for a couple of weeks. The bounce in the global markets on economic data was responsible for Hong Kong moving higher. I like the outlook for this play near term and we will manage it from a short term perspective (holding 13 plus weeks).

Raised stop on XLI, IEV, MOO, EWS

Sold 1/2 the play on SSG (short semiconductors) at the open as we discussed on the video update. Positive open took money off the table. Watch tomorrow and take other half off if warranted by a upside follow through in the technology sector.

Solid bounce in the broad markets and just as important we held most of the gains into the close. Volume improved again on the buy side and investors were up beat than they have been the last month. The key will be to hold the move higher.

Of the ten major sectors they all made solid moves higher on the day. The leader were materials, industrials, energy, finanicals and consumer services. They all remained in their respective trading ranges or consolidation patterns, but the move gave some breathing room as the market works through the current challenges relative to the economy.

Telecom and utilities both moved to the top of their respective trading ranges.  IYZ is back near the high and still looking for the catalyst or break through resistance. XLU cleared resistance at the $31.25 mark and could move higher. Watch both as opportunities on continuation breakouts.

Other areas of interest today were, transportation (+3.6%), housing (+3.8%), banks (+4.2%) and oil services (+4.5%). The move help each maintain support levels and back withing their trading ranges.

Solid day and opportunities will arise on the upside if we follow through.

No changes to the watch list today, but there is plenty to watch overall relative to the broad market indexes. We have tested again the 1040 support on the S&P 500 index, the NASDAQ tested 2100 and the Dow 9935. The SOX broke support at 312 and pushed to the next level at 305. The weakness in the technology sector is taking it’s toll on the psyche of the broad markets. Financials are in the same boat sitting on 242 support on the Dow Jones US Financial Index. Both sectors will be the make it or break mode for the broad markets.

No leadership for the markets, and that continues to be the challenge. The downside risk is growing and it is time to pick our entry points (watch list) and wait patiently to for the outcome at this point. If we find a catalyst to the upside we will go with that and establish our upside plays.

The play list remains the same and I raised the stop on SSG relative to the move higher again today. The stop is break even now and I am looking at taking half off with a gain of nearly 9% on the play. Monitor the play and manage your risk/reward relative to the outlook short term.

The balance of the plays are like the market – up and down depending on the day. Money flow continues towards bonds with the 10 year Treasury yield dipping to 2.47% on the day. Gold was higher break through resistance at the $121 level on GLD. The dollar was flat against the euro, but continued to struggle against the yen despite intervention by the Japanese government.

Patience and focus, one day at a time we take what the market gives.

The play list remains intact with the pullback today negating the gains from Friday. We raised the stop on SSG to dampen the risk of the play. The balance of the play list remains the same. We may deal with stops tomorrow relative to the reception heading into the trading day. The challenge remains the outlook for the economy and the data released this week isn’t going to help this matter. In fact, the data may be the piece that determines the near term market direction.

Risk management is the key short term as the trading range attempts to hold support on the downside yet again. Stay focused and stay disciplined as we move forward.