EGG Scan for August 28th

Flat day as the markets were mixed. Running the scans tonight validated the uncertainty in the broad markets. The best performing asset class overall was bonds. That is a negative statement in the current move off the August 7th low. Utilities a single asset class was up more than bonds, but then it is a defensive sector? The other top asset class was global emerging markets and emerging market debt. One day does not change things, but it does get your attention.

There is plenty of opportunities short term to watch, but the larger question looming for some is what about the longer term outlook for the US markets relative to the economic picture and the Federal Reserve. Only time will provide the answers, but we still lack clarity longer term.

Running the EGG Scans – First the daily winners…

The day to day shift in leaders remains in play today and that brings with it more questions and not many answers. Watch for the leadership to rise from the confusion and the opportunities they will present, but it will take patience for this to happen.

Treasury bonds (TMF or TLT) the leaders on the day and hitting new 12 month high. The May 2013 highs are the next target. Why? It isn’t fear or least that is what the general consensus says anyway. Rotation from the weakness in the euro? What about the BRIC nations forming their own bank? Are they not retaining more cash in other currency? Watching to see how it unfolds going forward.

Brazil (EWZ) solid break from the trading range and move higher. The country is giving the emerging markets a lift overall. Watch for the opportunities in the specific country ETFs.

Latin America (ILF) more focus on the emerging market growth. Positive upside and break higher on the day. EWT was also up more than 1% on the day.

Energy MLPs (FEI) add this to the list from Tuesday’s EMJ. Upside remains in play with plenty of potential upside.

Utilities (XLU) fell on Tuesday and regains the upside on Wednesday. Still one to watch for the short term potential on the upsdie.

Still interesting from yesterday: 

Russell 2000 Small Cap (IWM) the index was up nearly 1% on the day, but more importantly it followed through on the break above the $115.50 level. No resistance in play until the previous highs at $120. I like the odds on the move short term. TNA is the leveraged ETF and entry was hit at the $75 mark.

Biotech (XBI) jumped through resistance on Monday and followed it up today with another positive gain on the day. 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.

Energy MLPs (JMF) gained 2.1% on the day and moved back to resistance at the $22.25 level. If crude holds steady and energy sector maintains the break higher, this sector will follow suit on the upside.

Financials (XLF or FAS) held the upside move with modest follow through on Tuesday. It is still up to the banks and brokers to lead the sector to higher ground. It will require patience going forward.

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.

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.

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

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. Positive day for the sector with housing data on prices showing positive increase. Stick with the move and watch to see how this unfolds. Patience as we are still looking for 2-5% move on the trade.