EGG Scan for July 22nd

Mixed day for the broad markets with the winners more of the peripheral asset classes like commodities and bonds. Russia was back in the headlines and the country ETFs were off significantly at the open and regained some of the losses, but still remains on the downside overall.

Crude was up to $104.60 putting the commodity back in a leadership role on speculation relative to the geopolitical risk. not my type of trading, but it is in play short term.

Country ETFs are rising up the ladder with Brazil (EWZ) breaking higher, Thailand (THD) and Indonesia (EIDO) also making solid moves on the upside. RUSS has been the big winners with the decline in Russia as well.

Base metals (DBB) added to the upside again today and continues in a solid uptrend.

It is a good time to be patient and let the noise filter and the charts settle as the anxiety creates disruptions in the trading. Trends are better trading partners than volatility… at least from my perspective.

Running the EGG Scans – First the daily winners…

VXX was up 2.2% on the day as the VIX index rose to 12.5. The day-to-day volatility has risen over the last two weeks and it looks to continue for now now. The trade in VXX could unfold if the uncertainty globally continues to rise.

UCO – long crude oil was in the scan today as the commodity bounces on speculation on the geopolitical rumblings around the world. Oil has been another speculative trading opportunity in the current environment.

RUSS – short Russia was up 7% on the day, but you have to be willing to digest the volatility in the news here as well.

DGAZ – short natural gas is running higher on the downside slide in prices. The build in supply has not helped the outlook at all. The worries of over supply are building and that is what sent prices down near the $3 level last time.

EWZ – Brazil broke to a new high from a four month consolidation range. This is a positive sign for the country and the ETF short term. Higher oil prices helps the country.

Patience as we let some of the chop work out of the market short term.

Current EGG:

We posted China (FXI) as the EGG potential last week. We gapped higher, tested, but held the move higher. With the test on Thursday we added the trade and held into the weekend with the bounce back on Friday. I still like this trade looking into the week and we will manage our position and our risk accordingly. No events to this point relative to the country, some speculation, but we will continue monitor the risk of the trade. See table below for the details on the stop.