On Tuesday we resumed with the US equity leadership and positive outlook. Today the shift to the global markets was obvious. Russia and China lead the way on the upside as both bounce off recent tests of the uptrends. This does not negate the move on Tuesday in US stocks, but only broadens the leadership in the asset classes. The chart below is the seven asset classes we track via ETFs to show the movement relative to US as the benchmark. As you can see the US equities are still leading off the April 11th pivot point and turns in emerging markets (EEM) and EAFE index (EFA) is worthy of note. Today’s scans show that renewed interest in the global markets very clearly.
Emerging markets posted another solid gain on the day with more positives in China’s economic data. Russia (+1.8%) and China (+1.9%) both aided the upside in the sector. India was up 1.5% to help as well. This is something to watch moving forward as potential opportunity.
Treasury bonds stayed on the downside again today on optimism towards the economic data and fear it will be good enough to encourage the Fed to tighten interest rates. This is something to watch as well going forward.
See Trading Notes for July 2nd tomorrow morning for further comments to what is moving.
Running the EGG Scans – First the daily winners…
RUSL (Russia) as stated above solid leader on the day and keeps the uptrend alive.
YINN (China) as stated above solid leader on the day and resumes the uptrend after test.
DGAZ (Short Natural Gas) As we discussed on Friday this commodity was building a negative sentiment and now it is testing the break lower.
TMV (Short Treasury Bonds 20+ yr) two days of rising rates and 12 basis point increase has selling ramping up. Watching to see how this unfolds as well going forward.
DBB (Base Metals) another solid move to the upside with a 2.5% gain. We have been talking about the moves in copper and steel of late and this validates the interest in the move higher.
India (PIN), Hong Kong (EWH), Greece (GREK) and Australia (EWA) also showed positive turns higher on the trading day in the global sector.
PJP (pharmaceuticals), GDX (gold miners), BIB (pharma), QLD (NASDAQ 100) and
Broadening the opportunities short term in the uptrend. Watch, manage risk and practice patience.
We added TNA on the test and bounce early today in trading. However, that was the end of that as the small cap stocks trended lower the balance of the day. Watching to see how the futures set up following the jobs report and looking for a bounce back above the entry. We have some cash left and will look to add to the position if the upside resumes.
July 2nd AM NOTES on EGG:
IWM on move above $120.20 is of interest or TNA at $84.40. (open set to test lower… watch)
FXI at $37.45 on upside confirmation. (Gap open futures near $38) not willing to buy at that level)
EDC at $31.80 on upside confirmation. (Gap open futures near $32.40) not willing to buy at that level)
Look for update as we start the trading day. I want to look at the futures and determine if any of the scan ideas we are watching meet our requirements for entry.