One EGG scan for August 29th

A second day of uncertainty that started on the downside, but managed to move back towards neutral on the day. Russian rumors back in the news, but that faded as investors returned to trading. Despite the news volume was still on the low side and not much transpired except the VIX index moved back above the 12 mark. As we stated in our notes last night we are expecting some volatility heading into the holiday weekend and the month of September. One day at a time and stop management is all we can do… speculating on could, might, should or will happen is a guessing game I would rather not play. Manage the things you can and file the ones you can’t.

Running the EGG Scans¬†– First the daily winners…

The day to day shift in leaders remains in play today and it brings more questions without not many answers. Watch for the leadership to rise from the confusion and the opportunities they will present, but it will take patience for this to happen.

Treasury bonds (TMF or TLT) were the leaders again on the day and hitting new 12 month high. The May 2013 highs are the next target. Why? It isn’t fear or at least that is what the general consensus says anyway. Rotation from the weakness in the euro? What about the BRIC nations forming their own bank? Are these nations¬†retaining more cash in other currency? Watching to see how it unfolds going forward. Trade remains in place.

Russia Short (RUSS) Surprise!!! Imagine the UN stating Russia is not following protocol and their stocks fall more than 3% and the leveraged short ETF jumps more than 9% on the day. News driven and difficult to trade.

Gold Minders (GDX) back on the list after selling off. The price of gold moved higher today and that sparked some renewed interest in the miners. Established a bounce off the lower end of the existing trading range and worth watching and trading if it follows through.

The rest were not worthy of attention as they didn’t register moves that would swing momentum in either direction.

Honorable mention: SOXL up 1% (3x leverage on SOX index), MMD the muni ETF, BBN build America bonds and XLU utilities all posted positive moves relative to their chart patterns.

Still interesting from yesterday: 

Russell 2000 Small Cap (IWM) the index followed through on the break above the $115.50 level. Tested the last two days, but remains a positive for now. No resistance in play until the previous highs at $120. I like the odds on the move short term. TNA is the leveraged ETF and entry was hit at the $75 mark.

Biotech (XBI) jumped through resistance on Monday and followed it up on the upside. A follow through on this large cap ETF or the multicap ETF, IBB are two to watch for the follow through leadership in the healthcare sector.

Financials (XLF or FAS) held the upside move with modest follow through on Tuesday. It is still up to the banks and brokers to lead the sector to higher ground. It will require patience going forward.

Brazil (EWZ) solid break from the trading range and move higher. The country is giving the emerging markets a lift overall. Watch for the opportunities in the specific country ETFs.

Latin America (ILF) more focus on the emerging market growth. Positive upside and break higher.

Energy MLPs (FEI) add this to the list of upside plays with plenty of potential upside.

Utilities (XLU) fell on Tuesday and regains the upside on Wednesday. Still one to watch for the short term potential on the upside.

STILL ON THE REPORT:

Natural Gas (UNG) back in the line up on the upside as this commodity continues to frustrate investors. We are back to the double bottom setup we discussed last week and we will watch to see if it follow through.

Current EGG:

Added ITB (homebuilders) on Monday. The disappointing news from the new home sales pulled the ETF lower, but the news was not a bad as the headlines prompted. Sector tested lower a the open and held stops off the position until we could see the outcome. Plus there was positive news on the pending home sales. I still like the fundamentals relative to the prices. Stick with the move and watch to see how this unfolds. Patience as we are still looking for 2-5% move on the trade.