EGG Scan for August 14th

The futures were positive heading into the Retail Sales data, and even a disappointing number couldn’t derail the positive sentiment to start the trading day. The indexes closed on the positive side, but once again the volume was on the weaker side of the 50 DMA for volume. The leadership today came from the technology and health-care sector, both of which benefited the NASDAQ helping it to gain 1% on the day. IBB was up 2.2% and XLK gained 1%.

Tuesday we discussed the question of if the rally was over following a downside move in the indexes. Does the move higher on Wednesday put the upside back in play? Wait for tomorrow mornings headlines and we will have and answer. The news is driving the day-to-day movement in the indexes and creating plenty of anxiety for investors short term. As stated, the retails sales were flat and even  ex-autos only gained 0.1% which was the weakest number in six months. XRT has dropped lower the last two days and is back in position to test support at the $83.70 level. Despite that the S&P 500 index move to 1942 and in position to test the 1949 resistance. All ten of the sector posted a positive day of trading. Looking at the scatter graph eight of the ten sector have outperformed the index since the bounce off the low on August 7th.

Crude oil sold lower to start the day, but the inventory data help boost the price off the lows. $97.59 was only a 22 cent gain on the day, but it did erase the 0.8% decline. Natural gas on the other hand closed the day down 3.7% and never bounced. Maybe tomorrows inventory data will help the commodity. This move negates the bottoming pattern that has been trying to break higher the last two weeks. Metals and agriculture were both lower on the day as well. The US dollar continues to move slightly higher and the dollar index gained on the day as well. The strong buck is putting pressure on the commodity sector short term.

The global markets responded in kind posting positive gains on the day. China again post positive move and resumption of the uptrend short term. Vietnam, Taiwan, Thailand and emerging markets all posted solid moves and worth watching moving forward. The mature markets of Europe are still struggling to gain any solid footing. A bottom reversal is setting up, but there is still plenty of work to do before the confidence in the upside returns.

Bottom line… one day at a time. The opportunities will unfold we just have to be prepared to capitalize.

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

Sellers return and the scans only turn up 25 positive opportunities and only seven of those were positive on the day.

NASDAQ 100 (QLD) posted a solid move on the day and pushing back towards the previous high. This is the leader overall and definitely was in that role again today.

Biotech (BIB) which is the NASDAQ version of the sector was up nearly 4% due to the leverage, but the 2.1% overall in the sector was one of the leaders on the day pushing both the sector and the NASDAQ higher. The triangle or wedge pattern is breaking on the upside with the move and worth watching as a potential play for the EGG if we hold the move.

Natural Gas (DGAZ) the short ETF ran higher as the commodity dropped more than 3% on the day. This puts the short side of natural gas back in play.

Coal (KOL) posted a nice gain and pushed through the resistance of the trading range. The move is a break from the consolidation and came on twice the average volume.

REITs (VNQ) establishing a ‘V’ bottom with a solid gain on the day. The sector has been under pressure due to interest rates and worries about the Fed pushing them higher sooner than originally expected. This fear has been subsiding over the last week.

Inverse of yesterday and the move puts the stocks back in a positive mode. The key is to remain patient as we have stated no need to bang your head against the wall. Focus and let this all unfold.

Still Watching: 

Gold miners (NUGT) the bump in gold prices has helped the miners move higher. The stocks did well on Monday and were flat today. Some upside and breakout in the price of gold would help the momentum. Still holding for now and watching the progress.

Volatility index is back on the downside and testing the next level of support at 12.90. SVXY as we posted is the current trade in the VIX.

Treasury bonds regained loses from Tuesday as the yields fell back to 3.24% again. TLT moved back to the key resistance point near the $116 mark. I still believe this is fear motivated by investors. But, it also is getting rotation from the global markets looking for safety in light of the geopolitical issues. If both calm rates should rise again. But, like any speculation you watch and let it unfold or validate your belief.

Coffee (JO) moved above $35 and has tested the move ever since. The current trading range has developed a descending triangle and looking for a break from the pattern. The commodity is getting pressure from the price of coffee both short and long term. Based on analyst and projections 2015 could experience some shortages or lower production. Not for the weak at heart and needs a longer term focus.

China (FXI or YINN) two days of selling takes out the support at the $40.30 mark , but it has recovered nicely the last couple days of trading. The upside remains positive and we are adding the position back based on the resilience in the country short term.  Watch for the next opportunity in the country ETF if the upside breaks above the $41 mark.

Small Caps (IWM) the short interest rose last week and the ETF tested the $110 support level. It has been volatile intraday, but managed to break back above the $112.50 level in trading Monday. ONLY ETF model added a position in the index, but they struggled to resume the upside. Nice move on Wednesday, but still plenty of work to do. Watch as the downtrend is still in play until we follow through on the move off support.

Social Media (SOCL) cup and handle breakout still in play. Moved above $20.11 on the Tuesday and Wednesday produced the confirmation for the follow through on the upside.

Current EGG:

Bounce is¬†back as we stated we were watching to see if the upside resumed. This is becoming a day trading type tape. Since we don’t do that we will continue to be patient and let this short term volatility play out.¬†¬†We will see where the futures are in the morning and make any posts that develop that are worth the risk.