End week positive and future pointing to higher to start the week. This could point to some upside trade opportunities if the bounce materializes.
Running the EGG Scans – First the daily winners…
We noted that the short ETF are showing up more and more in the scans and that is a good indicator the downside is gaining momentum of the direction. That said, the positive egg scans from Friday jumped back to 109 ETFs. Big shift with the positive move. Still not out of the woods, but could be the bounce off current lows in play.
China (YINN) reversed from selling and put in positive upside day as one of the leaders. Watching for follow through on the upside move to start the week.
Gold (GLD) was higher again on the day, but still needs some momentum to clear resistance in GLD. $126.50 is the level to break from the current trading range and drive the metal higher.
Biotech (XBI) back again in the scans on the upside and showing a consolidation pattern. Look for breakout and volume if the upside move continues.
Natural gas (UNG) move on the upside again on Friday with 2.1% gain. Bottom reversal still in play along with the volatility in price.
Treasury bonds have continued to move higher as rates have fallen. Watching for change currently relative to the Fed stimulus cuts and the rumored interest rate hikes? TLT posted gains on the yield moving to 3.23% on the thirty-year bond. This puts us back near the low on the bond yield and pushing the highs on the price of the bond. Go with the trend and let it play out.
China (FXI or YINN) two days of selling takes out the support at the $40.30 mark. Flag pattern breaks lower, but not much conviction in the selling. The upside remains positive and we may look at adding the position back based on the resilience in the country short term. Added upside trade in ONLY ETF model on Friday.
Small Caps (IWM) the short interest rose last week and the ETF tested the $110 support level. It has been volatile intraday, but has not managed to break back above the $112.50 level or below the $110 level. Watching for a possible reversal to lead the broad indexes higher, but that has not materialized yet. The good news is it has not sold lower either. Added upside trade on Friday in ONLY ETF model.
On the Downside:
Short Oil (DTO) reversed the positive gain from Monday in oil as the downside returned. There is a reverse head-and-shoulder pattern in play and the break above $31.20 put the upside in play for the short fund. USO broke the 200 DMA and is in position to continue the downside move. $97.45 support broke Wednesday, but bounced back to close at $97.70 on Friday.
Semiconductors (SMH or SOXL) fell below the 50 DMA, but attempted a reversal today avoiding more downside movement for semis. The missed earnings have carried some weight pushing the sector lower. Watch how this plays out as it is a key sector to the markets health. Short trades are still the trade of choice until we have a confirmed bottom reversal. $48.50 key support for the sector. Broke support and short trade on semi’s is in play.
Direction is still like a yo-yo and without some clarity it is a challenge to put money at risk on speculation versus high probability trades. Choppy, Choppy, Choppy.Friday bounce and positive futures to start the week could bring the bounce trade back into view. Again is it important to be patient with this model. The trades will materialize as clarity is gained.