FOMC minutes didn’t hold any market changing news and we will move towards tomorrow with the same focus on follow through on the bounce to redefine the uptrend. Running our scans tonight we find not much changed in leadership and we will focus more on how this handles resistance now relative to the major indexes. Focus on what is working and keep moving forward.
Some simple rotation in the scans are in play… one day at a time.
Running the EGG Scans – First the daily winners…
Four solid days to the upside and nothing showing signs of selling… volume is the only challenge currently to that worries me.
Financials (FAS) leader on the leveraged ETF, but XLF is pushing higher as well. Watching for some positive in this sector still, but it remains a challenge regardless from my view currently.
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. entry at $113.50 is what I am watching tomorrow on follow through.
Small Cap (IWM) tested the move higher on Tuesday, closed below the 200 DMA and looking for the move through the $115.50 level for now. Stop has to be a move back below the 50 DMA on short term trade. Be patient and let it play out.
Natural Gas (UNG) showed positive gains on Tuesday and positive selling (DGAZ) on Wednesday. The lack of direction remains in the commodity, but the bottoming or base is still building. FCG, the natural gas ETF still showing positive towards the upside and is in position to break the downtrend line in play. Both need to trade together and both could offer opportunity.
Interesting: 1) DBB bounced back with Copper gaining 2.3%? bounced off the 50 DMA and looks positive again. 2) JMF the upside of the MLPs still in play on the Kinder Morgan news on consolidating the MLPs to maximize upside. 3) EWA breaking to new high as the country benefits from bounce in the commodities and Asia. 4) MVV moving through resistance at the $70.70 level with midcap stock making a nice move off the recent lows.
ON THE REPORT THIS WEEK:
Energy (DIG) showing an ascending triangle pattern setup as the sector tested lower. Oil moved higher on the supply data and could act as catalyst on the upside. Watch to see how that story unfolds short term.
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. holding on test.
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: small consolidation move and watching for follow through on the upside.
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. TODAY: great volume move on the continued push higher. JEC, ADT, LUV and DAL leading the upside opportunity.
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: holding the move higher and need some patience… 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: Held the gap higher from Tuesday and still need to move through resistance at the $24.55 level. Stop $24.15.
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 needs to break above the $45.11 on upside another opportunity to add to positions as trade.
Retail (XRT) held support at the $83.75 mark and has move progressively higher. AEO added 12% on earnings today and ANN was up 5% as the retail news remains on the positive side. 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 and some positive earnings data.
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 held at 3.22% after starting the day higher. 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. FOMC minutes did nothing to disturb the flow of the sector.
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.
Early selling raise question marks and now we are looking for the move relative to the FOMC minutes. Yields started higher on the news, but faded. TBT still offers an interesting trade opportunity. The threat of higher yields is the key to how this proceeds.
Biotech (XBI) settled lower today and testing the regression line. $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.