EGG Scan for August 26th

Welcome back to the buyers from your long weekend as you took Friday off. The upside trend remains in play and some rotation in leadership is helping keep the move intact. Financials have come to life following the settlement with Bank of America. I like what the move offers in terms of upside to the S&P 500 index. Healthcare continues to lead with the biotech driving along with the pharma stocks. Industrials, Consumer Services and Utilities are also in the mix on leading the upside. Energy made a nice effort to reverse the selling ways to start the week, but there is still plenty of work to do.

Good start to the week and we will take one day at a time.

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

Still a clear cut line between the haves (upside leaders) and the have nots (downside challenges). Let it unfold one day at a time and use your stops to keep the downside risk in check.

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.

Biotech (XBI) jumps through resistance with a solid 3% gain and reversal on the test. 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.

Short Gold Miners (DUST) the leveraged ETF jumped 5% and is in position to break from the bottom pattern on the ETF. The price of gold has been under pressure again and the miners have paid the price more than the metal. Watch GDX as indicator… if breaks below the $25.50 mark DUST is the trade opportunity.

Financials (XLF or FAS) the upside move in the sector was given a boost by the news of the settlement for Bank of America. Watching for the banks and the brokers to lead the way higher. Morgan Stanley and Blackrock were leading the upside today. Citigroup and JP Morgan also posted solid bumps on the upside.

Emerging Markets (EEM) nice upside move on the day, but the individual countries show some promise as well. VNM, THD, EWZ, and BIK all showed positive moves to add to the upside reversals.

Russia (RSX)¬†The ‘V’ bottom is now at resistance and the question about follow through is in the outcome of the negotiations with Ukraine. $25.50 is level to watch on the upside.

Treasury Bonds (TMF) the long bond bounced again towards new highs as yields fell again on worries over the outlook for the global markets and growth. Still only a trade on fear globally with tight stops on any positions.

ON THE REPORT THIS WEEK:

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: Need follow through on the break higher with some volume would be nice.

Software (IGV) posted a solid gain for the technology sector and is breaking from a consolidation wedge or triangle. Got the break higher on Friday hitting the entry point ($86.80) for trade. Test of the move today and needs to hold support. TODAY: Test of the move higher. Stop $87.

Industrials (XLI) posted solid bounce as well with a ‘V’ bottom recovery. Moved through¬†the 200 DMA and facing¬†resistance at the $54.50 level. Volume questionable except for¬†one big spike . TODAY:¬†Look for move through resistance and scan for leading stocks in the sector to trade the breakout move.

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. Watching to see how it holds in trading at the open on Tuesday. Stick with the move and watch to see how this unfolds.

Got early break through of¬†the resistance on the ‘V’ bottom reversal. Positive data in the sector has been the drive. Positive report last week for new home sales, pending and new starts. Disappointing sales report in three of the four regions. Patience as we are still looking for 2-5% move on the trade.