EGG Scan for August 20th

Another positive day for the broad indexes. Go figure. Six of last eight days in the green following the low on August 7th. Bounce back from the selling is nearly complete and the next question on the docket is sustainability of the move higher? The voume remains on the weak side, but the sentiment is rising again. Good or bad only time will tell, but for now the buyers have taken over again.

Retail, utilities, consumer services, energy and semiconductors were the broad leaders on the day. Digging in we find plenty of other moves that were good, but the caution flags are still out for the move. Aeropostale (new CEO) and TJ Maxx (earnings jump) were the leaders for the retail index. Despite the talk surrounding the consumer the sector continues to add on the upside. The  breakout today on XRT was clear and impressive.

Some simple rotation today in the scans starting to show.

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

Solid start to the week, but again on low volume.

Homebuilders (ITB) Bottom reversal cleared the $23.40 resistance and gapped higher on better than expected housing permits and starts report. Lower interest rates have helped as the sector recovers from the slow start this year. Looks ready to continue higher on the news.

Semiconductors (SOXL) moving back towards the July highs, but still some questions relative to analyst support for the group. I like the trade, but cautious of anything more at this point.

Small Cap (IWM) was a big leader on the day, but it did manage to move through the resistance at the $115 mark and now looks ready to continue the upside move on the follow through.

Natural Gas (UNG) tested the lows again and now a positive move higher creating a double bottom with $22 a breakout point to watch. FCG, the natural gas ETF also moved to the upside and is in position to break the downtrend line in play.

Energy (DIG) showing an ascending triangle pattern setup as the sector tested lower. Oil continued below $95 today, but the stocks rallied higher? Watch to see how that story unfolds short term.

From Monday:

India (INDA) moved back to the top of the channel or trading range. Look for a move above $30.90 mark for the ETF. Emerging markets are coming to life slowly. TODAY: followed through on the move higher giving an entry point for a short term trade.

Software (IGV) posted a solid gain for the technology sector. TODAY: Follow through on the $86.80 breakout and upside trade. gaining some momentum.

The internet (FDN) was up to help the technology sector maintain the positive move higher from last week. One of the key leaders for the sector and the broader index. TODAY: nice continuation and moved above the 50 DMA.

Industrials (XLI) posted solid bounce as well with a ‘V’ bottom recovery. Watch the 200 DMA as resistance and move higher would be worth a trade on the upside move. Volume questionable.

Biotech (IBB) the fund showed up again¬†on the scan list as the sector has been and remains one of the primary leaders. Looking for a move above $266.50 to continue the upside move and challenge the March highs. TODAY: got the move higher on lower volume… tighten stops and see how it plays out from here.

Russia (RBL) was up 1.9% as the rumors are now on the peace side. That puts a ‘V’ bottom pattern in play and a upside trade if the rumors are true. Worth trading with tight stops if you are willing to accept the risk of the trade. TODAY: Gap and run on the break through. As long as the news is positive the move higher is in play. Stop $24.15.

Still Watching: 

Pharmaceutical (PJP) followed through again on the upside for the third straight day. The reversal of the downtrend (micro) was positive and closed back above the 50 DMA.  That is helping lift the healthcare sector (XLV) overall as well. Solid leadership in the sector and worth watching as well.

Emerging markets are still in play with VNM, FXI and others breaking higher. Whole is easier to trade than the parts, but there are parts worth digging in and finding the movers. TODAY: EEM break $45.11 on upside another opportunity to add to positions as trade.

Retail (XRT) jumped 1.6% and held support at the $83.75 mark. Dollar General got a higher bid from Family Dollar to trump the bid from Dollar Tree to purchase the company. AEO and JCP both were up nearly 4% on the day to lead the sector as well. Despite the warning and lack of sales growth investors still want to believe in the upside of the sector. Technically interesting, fundamentally not convinced. That makes this a trading sector versus holding longer term. TODAY: Continued higher see above.

Energy MLPs (AMJ) are getting a boost from the Kinder Morgan news earlier in the week as the upside continues despite the price of oil. New high and gaining as the volume is falling off. Watch, manage your stops and let is run.

Treasury bonds experienced some selling again today as TLT moved to the $116.15 support level. The yields rose¬†back to 3.22% bouncing¬†off the low from Friday. I still believe this is fear motivated by investors (decline in yields). But, it also is getting rotation from the global markets looking for safety in light of the geopolitical issues. Whatever is driving rates lower… there are plenty of analyst and investors scratching their collective heads.

China (FXI or YINN) Bounced off the low and made move to new high and back near the previous high currently. I still like the longer term view of the country ETF, but you need to have a strong stomach to endure the ride.

Social Media (SOCL) cup and handle breakout still in play. Moved above $20.11 and held on in the storm of ups and downs. Managing the risk of ownership in the models, and looking for enough momentum to make a trade.

Current EGG:

Bounce gained some price momentum on the day, but it started the day in negative territory. We hit the entry point, but the conviction (volume surge) was not great. Watch TBT for reversal trade on interest rates making an upside appearance short term. $56.90 is the level to watch for trade opportunity. Closed near $57 and looking still for the trade entry.

Biotech (XBI) settled lower today. $157.60 upside trade is attractive as well with the current momentum in the sector. Attempted an upside continuation, but failed to hold the entry point.

Watch AM post for what will set up best for the trading day.