Monday saw gains evaporate the second half of the day, but still positive tone overall for the broad markets. M&A activity along with money flow picking up in the growth stocks all looks positive. Of course that alone makes most investors nervous. The buyers have control and until the sellers are willing to make a push to regains any downside pressure… you go with the trend.
Running the EGG Scans – First the daily winners…
- Crude Oil is back (UCO) to the May high. The price of crude jumped on supply worries and the inventory data is out today… again speculation driving prices short term.
- YINN – China hit a new for the year. Breakout from a wide range base? Upside in play.
- TNA – Small Caps (IWM) posted a solid gain again on Monday leading the major indexes. Entry points hit last week on the trades. Making a run at the March highs.
- EDC – Emerging markets (EEM) back to the upside velocity. Broke from the upside consolidation pattern and continues the previous uptrend. Looks ready to run.
- KRE – Regional banks along with the large banks are leading the financials higher. KBE is the current EGG trade.
Rotation to the growth stocks has kept the current drive higher alive. Overall leadership continues to broaden showing signs of a positive market. Getting extended on the current move and would expect some testing near term. Depending on the catalyst is how you manage the process. Stops adjusted on the EGG trade today and watching to see how the financials react to any downside pressure.
EGG Model Watch List:
- PJP – Pharma (breaking from consolidation, but momentum has stalled.) entry $58.75, stop $58. Another gap open with a $59 entry point and adding to the risk of the trade. Still interesting move, but needs a follow through on test of the move. $59.45 entry. Still attempting to follow through on the upside. XPH did break higher showing strength in the large cap pharma stocks.
- BRCM – giving the best look relative to the semiconductors leadership. $31.15 entry last week was optimal looking back. Thus, a test of that level and hold, or a move through $31.50 on volume would be of interest for a EGG trade on individual stock level. Got the early move last Thursday (entry $31.50) and it followed through on Friday. News pushed the stock up 12% last week. Sold half at $35 and $34 stop on the balance. See how this plays out… the news wasn’t that earth shattering and willing to take my gift of gains. Nice bounce back towards the highs the balance of the week. Raise stop to $37 on balance of shares. Topping and volume falling back to normal.
KBE 32.50 entry. Banks made the break higher and the market trend continues higher. The follow through move helps the upside in the broad indexes and we continue to look for the upside in financials as it attempts to take on a leadership role near term. Stop is $33.05
Holding position for now and watching how this plays out short term.